by Marc Raybin
February 9, 2016

As Sanctions Cool, Will PE Interest in Iran Heat Up?

After 10 years of isolation, the second-largest MENA economy could open to outside investment. Is private equity gearing up for investments?

Following the lifting of economic sanctions against Iran a few weeks ago, Iran is poised to re-enter the global economy after many years of isolation. Private equity has taken notice, as evidenced by Griffon Capital, a Tehran-based firm announcing it was looking to raise a fund in 2016. But the question is: Is this an isolated case, or the beginning of a flow of PE deals?

Griffon says it would like to raise €100M this year for an offshore fund focused on Iranian stocks. Still, The Wall Street Journal reported last summer that the lifting of Iran’s economic sanctions did not necessarily mean private equity would flood that country’s market. There continues to be regulatory concerns, political uncertainty and a general sense of unease from the West.

All of that said, Griffon Capital is not alone. As Privcap reported last October, Canton Hermidas began looking at Iran as a viable investment play back in 2009. When sanctions were imposed, the firm pulled away but became active again more than a year ago when it appeared relations between the U.S. and Iran may be thawing.

And it’s not only the obvious plays that private equity and other sources of private capital are interested in.

While Iran has more than 9 percent of the world’s proven oil and gas reserves, investors have recognized that consumer goods, technology companies, retail, food, and healthcare could also prove to be interesting opportunities. With a GDP of more than $406B and the population of 78.5M that craves consumerism, the country boasts the second-largest economy in the Middle East and North Africa region, according to The World Bank.

You can read our article about private equity dipping its toe back into Iran here.

It is not all oil and gas in the Iranian economy that has investors excited. Consumer goods, technology companies, retail, food and healthcare could also prove to be interesting investment opportunities.

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