Dana Insurance’s share price has shed just under a third of its value since it sold a 5 per cent stake on the Tehran Stock Exchange (TSE) on 17 August, with analysts complaining that it was hugely overvalued.   

Dana’s initial public offering (IPO) sold shares at 2.60 US cents, which have since dropped to a current share price of 1.82 US cents.

“The stock was ridiculously overvalued when it listed so it’s not surprising that its price has fallen so dramatically since,” says Ali Mashayekhi, head of investment research at Turquoise Partners, a Tehran-based fund manager.

“It is now 30 per cent below listing price and is still falling. Our view is that, despite the fall, it is still a bit overvalued.”

On the day of the listing, Dana’s shares were trading with a price to earnings ratio of 35 compared to an average of 8 for the insurance sector and a market average of 6.

“We decided to pull out of the auction, as did a lot of investors, because the offering price was way too high – it was 100 per cent over our price limit.”  

“There have been a few cases in Iran where the price has dropped below IPO at some point, but this is the first privatisation case where it has done so within a week,” says Mashayekhi.   

The Iranian government raised $14m from the 5 per cent stake sale, equivalent to 5,273,750 million shares. It sold another 1 per cent stake on 19 August, bringing the total equity sold to 6 per cent (MEED 18:8:10).           

Dana has said they are considering selling up to 35 per cent of the company.         

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

Dana is Iran’s first and only IPO in 2010. It became the third state-owned insurance company to offer shares, after Asia and Alborz (MEED 16:8:10).