[A-List] Foreigners Can Now Take Punt on Iranian Market
critical.montages at gmail.com
Thu Jun 21 21:45:44 MDT 2007
Foreigners can now take punt on Iranian market
A subsidiary of Iran's largest bank, Bank Melli Iran, plans to launch
a fund of up to €300m to invest in Tehran's Stock Exchange, providing
the first chance for foreigners to take an exotic gamble on Iran's
bourse, writes Simeon Kerr in the FT on Thursday.
Flying in the face of tightening economic sanctions amid international
pressure over the Islamic republic's nuclear programme, the First
Persian Equities Fund already has verbal commitments of around €100m
with strong interest from European hedge funds and emerging markets
funds, according Stephen Austen, managing director of Mehr, a
subsidiary of the Tehran-listed Bank Melli Iran Investment Company.
Mr Austen argued that the Tehran Stock Exchange is heavily
undervalued, with a diversified pool of companies returning strong
dividends, but he concedes that the three-year, closed-ended fund
provokes an emotional response from potential investors.
Tehran's market index has fallen about 25 per cent since Mahmoud
Ahmadi-Nejad won the presidency in 2005. Capital flight from the
country has also increased.
Regional bankers say the fund could prompt further US concerns,
following recent US calls for gulf states to limit business ties to
Tehran. The Cayman Islands-registered fund, managed in Tehran, has a
contingency plan to move the fund into a private sector bank in what
Mr Austen describes as the unlikely event that the UN broadens the
sanctions regime to Bank Melli.
Mehr, which also has offices in the Dubai International Financial
Centre, has a solid commitment of €15m from its parent and plans in
August to start investing in blue-chip stocks such as car manufacturer
Iran Khodro and Arak Petrochemical Company.
Two previous attempts to launch Iranian equities funds failed in 2002
and 2003 amid the last Tehran bull run.
This entry was posted by Ben Smith on Thursday, June 21st, 2007 at
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