2016-01-28

Iranian Firm Launching Private-Equity Fund to Focus on Consumers

Turquoise Partners, an Iranian financial-services group, is launching a private-equity fund to take advantage of opportunities created within Iran by the sanctions relief brought by the country’s recent nuclear deal, the company said Thursday.

The fund, which aims to raise $200 million in the first half of the year and is being marketed to foreign investors, is the first of its kind to be launched since the withdrawal of sanctions began this month, bringing the country out of more than a decade of financial isolation.

Investments in Iranian companies will seek to capitalize on the growth of the country’s consumer market and will spread across a number of sectors, including consumer goods, pharmaceuticals and hospitality, the company said. Iran has a population of around 80 million.

Swiss bank Reyl & Cie’s Dubai branch is partnering with Turquoise on the fund, it said.

Foreign investors see Iran as fertile ground for returns now that sanctions are being lifted. Under the landmark nuclear accord reached in July, Iran agreed to scale back its nuclear program, which Western countries suspected of developing weapons.

Iranian leaders, too, have sought to attract foreign investment on the back of the deal, suggesting Iran needs billions of dollars of foreign funding to help reach a government target of 8% annual GDP growth. Iran’s economy is projected to grow by 4.4% this year, according to the International Monetary Fund.

Many investors are wary of the Iranian market, however. Sanctions could snap back into place if the country doesn’t make good on nuclear-deal obligations. A tangled bureaucracy, a dearth of management talent and the dominance of the Islamic Revolutionary Guard Corps in many sectors are among investors’ other worries.

Iranian President Hassan Rouhani is nearing the end of a four-day trip to Italy and France, during which he announced large business deals between Iran and European companies, including French car maker Peugeot and Italian steel giant Danieli.

Several financial firms, including Turquoise, already have started funds geared toward foreign investors interested in Iran, but so far they have focused mainly on its stock market.

Turquoise announced an Iranian stock-market fund with the U.K.-based Charlemagne Capital last April that also aimed to bring in $200 million. Griffon Capital, an Iran-focused asset management firm, announced the launch of a €100 million ($109 million) stock-market fund on Monday. U.K. asset manager First Frontier Capital has also said it is working on a stock fund.

Rouzbeh Pirouz, Turquoise’s chairman, said the private-equity fund would help turn around Iranian companies that haven’t fared well under sanctions.

“Iranian companies are more often than not suffering from ineffective management and are in great need of investment,” he said.