Iran's Dana Insurance initial public offering raises $14m

18 August 2010

Investors buy 5 per cent stake in nine minutes

The Iranian government raised $14m from its sale of a 5 per cent stake in Dana Insurance on the Tehran Stock Exchange (TSE) on 17 August, with the stock selling in nine minutes.

The stake is equivalent to 5,273,750 million shares.

Analysts have complained that the stock is hugely overvalued. It is currently trading with a price to earnings ratio of 35 compared to the market average of 6.

“The sale attracted huge interest and we had planned to invest, but decided to pull out because the stock was ridiculously overvalued,” says Ali Mashayekhi, head of investment research at Turquoise Partners, a Tehran-based fund manager.

Industry insiders had speculated that Dana’s listing would be postponed until September in order to avoid the low trading volumes associated with Ramadan and the quiet summer months.

“It is an unusual time to list, but the equity market has been very hot for the past few months and they didn’t want to miss the opportunity,” says Mashayekhi.

Dana is the third state-owned insurance company to offer shares, after Asia and Alborz.

The government continues to hold a controlling stake in Dana at 56 per cent. The Social Security Organisation is the second-largest shareholder, with more than 23 percent, while the remaining 16 per cent is owned by Iranian employees’ pension and investment funds.

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