The fund, which is managed by Griffon Asset Management, is an open-ended vehicle investing predominantly in the Tehran Stock Exchange (TSE) and Iran Fara Bourse (IFB).
Aimed at attracting an estimated €100m (£75.7m, $108m) by the end of the year; the fund is targeting UK, European, and GCC high net worth individuals, family offices and institutional investors.
Homan Harandian, chief executive of Griffon Capital, said: “The lifting of sanctions on Iran has created an unprecedented opportunity for investors. The Iranian economy has strong fundamentals and is expected to grow at an average rate of 4-6% per annum over the next five years.
“Today, and despite economic isolation for over more than three decades, Iran has developed into one of the world’s most diversified economies, with oil only accounting for roughly 10% of GDP.
“Other indicators also bode well for strong, steady growth, including a rising tax base set to reach approximately 35% of the government’s budget in the year ahead. This is a young, resilient and fast developing country and an attractive, long term investment proposition,” Harandian said.
Griffon Capital’s wholly owned local entity, Griffon Iran (Homa), is the fund’s sub-adviser. The fund will be run by portfolio manager Mehdi Farivar alongside Hossein Salimi; who together have 40 years of local capital markets experience, and have managed in excess of $15bn, more than 10% of the market’s total capitalisation.
Heading Griffon’s asset management team is Payam Malayeri, whose previous experience includes heading up and developing emerging market equity platforms and managing over a $1bn of long/short proprietary capital at top tier global firms; including Goldman Sachs and Citi, among others.
Malayeri said: “We are seeing significant investor interest in Iran with this historic market opening. With over 300 actively traded listed companies, Iran provides investors the opportunity to enter a highly diverse stock market, which is set to even further diversify with the significant pipeline of IPOs and privatisations expected in the next two to three years.
“This, coupled with trough corporate earnings today and the opportunity for further multiple and earnings expansion provide a good entry point for investors and pave the way for Griffon to deliver strong, steady returns over the long term.”
Value and growth
“Our focus will be to invest in companies we fully understand and whose management we know to be capable and have a sound track record,” said Farivar. “In Iran, value and growth opportunities go hand-in-hand, and there will be several catalysts and long term powerful trends at play making this a very attractive market.
“In addition, the Iranian stock market will also likely provide a great, uncorrelated investment opportunity for global investors. As an early example, in the week since the lifting of sanctions, and during a period of depressed global markets and oil prices, the TSE has been up close to 8%, when compared to lows at the start of January 2016,” Farivar said.
Griffon Iran (Homa) is fully licensed and regulated by Iran’s Securities Exchange Organisation (SEO). The fund will be audited and administrated by top tier, internationally recognised service providers outside Iran and will maintain stringent compliance with remaining international sanctions.
Marketing of the Griffon Iran Flagship Fund to UK and European investors is set to commence with a roadshow in London on 8 February 2016 following the conclusion of regulatory filings.