New Iran investment fund expected in April

09 April 2015

Foreign investor interest in Iran ramps up post-nuclear agreement

  • Iran fund could close by end of April
  • Tehran Stock Exchange appeals to investors
  • Iran’s readmittance to Swift is a “game-changer”

An investment fund solely focused on Iranian securities is expected to be launched before the end of April, a development reflecting the growing foreign investor interest in Iran following the signing of the nuclear deal in early April.

The fund is the first to be established via a new joint initiative of Tehran-headquartered Turquoise Partners, based in London and Charlemagne Capital, a UK-headquartered emerging market asset management fund.

Its first fund is anticipated to raise approximately $200m, and is set to close before the 30 June deadline to finalise the details of the nuclear agreement. The two firms expect to establish further funds as the Iranian market begins to open up.

The potential lifting of sanctions on Iran is expected to lead to a flood of foreign investors looking to invest in Iran’s Tehran Stock Exchange.

“We are seeing an enormous amount of interest,” Eddie Kerman, board member of Tehran-headquartered Turquoise Partners, based in London tells MEED. “Obviously over the past week, the phone and email have been going crazy. But even since the Rouhani government came to power [in 2013] the mood and sentiment has changed enormously.”

Early investors in Iran will most likely be European, as they are typically the “more aggressive frontier market investors”, he adds.

The Tehran Stock Exchange is considered highly liquid and well-diversified. According to December 2014 statistics, the exchange had a market capitalisation of $117bn.

One of the biggest stumbling blocks for the flow of international investor money into Iran is the lack of an adequate financial system. Iran has been locked out of the global payments network, the Society for Worldwide Interbank Financial Telecommunication (Swift), since 2012. This makes it extremely hard for money to be moved in and out of the country.

By June 30, there may be more details on how the easing of sanctions will affect the banking system in Iran.

“The game-changer is going to be the return of Iran to the Swift system and re-establishment of banking relationships,” says Kerman.

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