Offering of shares through 3rd ETF to begin in late 2020

August 3, 2020 - 12:8

TEHRAN- The deputy head of Iran’s Privatization Organization said that offering of shares through the country’s third exchange-traded fund (ETF) will be done in the ninth Iranian calendar month Azar (November 21-December 20).

Hassan Alaei told IRNA on Sunday that the shares of car and metal groups will be offered through the offering.

He said offering through the first ETF has been experienced some good growth so far, adding that subscription for the second ETF, which is for offering the shares of refineries, will continue until the end of the current Iranian calendar month (August 21).

The official further said that no decision has been already made about the fourth ETF.

On May 2, the Tehran Stock Exchange (TSE), which is the main stock exchange of Iran, listed the first exchange-traded fund (ETF) from a series of three ETFs, through them shares of some state-owned organizations and companies are planned to be offered.

An exchange-traded fund (ETF) is an investment fund traded on stock exchanges, much like stocks. An ETF holds assets such as stocks, commodities, or bonds and generally operates with an arbitrage mechanism designed to keep it trading close to its net asset value, although deviations can occasionally occur.

As described by Investopedia, ETFs can contain many types of investments, including stocks, commodities, bonds, or a mixture of investment types. An exchange-traded fund is a marketable security, meaning it has an associated price that allows it to be easily bought and sold.

The shares to be offered via the above mentioned Iranian ETFs belong to those governmental bodies defined in Iran’s privatization program, a comprehensive plan seriously followed up by the government to downsize and reduce its role in the economy.

The three ETFs are planned to offer 550 trillion rials (about $13 billion) worth of the governmental stakes.

The first ETF, established by the Ministry of Finance and Economic Affairs, comprises government shares in three banks, including Bank Mellat, Tejarat Bank, and Bank Saderat, as well as the shares of two insurance companies, i.e. Iranian Reinsurance Company and Alborz Company.

The government has a 17-percent stake in Bank Mellat, a 17-percent stake in Tejarat Bank, and an 18-percent stake in Bank Saderat.

In mid-June, the finance and economic affairs minister announced that the value of shares that are offered by the first exchange-traded fund had doubled.

Referring to the offering of the shares via the first ETF, Farhad Dejpasand said, “The offering was our first experience in this field. About 3.6 million persons purchased the units of shares offered by the first fund.”

MA/MA

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