Italian asset manager Azimut Group has signed an agreement to acquire 20 percent of Mofid Entekhab, the largest independent asset management company of Iran, which is part of the Mofid Group, the largest brokerage firm and financial advisory in the country.
At the same time, Azimut and Mofid Securities have signed a shareholders agreement to develop an onshore financial advisory platform and establish an offshore fund enabling foreign investors to access Iranian capital markets.
Azimut is the first global financial institution entering with an equity investment into acompany providing financial services licensed by the local regulator, SEO, in Iran.
Entekhab, founded in 2016, is the carve out of the asset management business of Mofid Securities with AUM of USD 89 million at the end of September 2017 distributed between 6 mutual funds and managed accounts.
Mofid Securities is the market leader among Iranian brokerage companies with more than 300,000 customers and a market share of approximately 7% as of September 2017among 107 brokerage firms. Entekhab has an 8% market share for equity funds and is the largest independent asset management company in Iran.
The Islamic Republic of Iran is the second largest economy in the Middle East with an 80 million population and a GDP-PPP adjusted of USD 1.5 trillion as of 2016 (18th world’s largest).
After the lifting of international sanctions in 2016, Iran is expected to grow above 4% per annum through 2020. Iran is one of a kind opportunity for global asset management companies being underpinned by:
(i) strong demographics (60% population below 30 years) including aneducated population (58% enrolment ratio at local universities) with a high degree of urbanization (74% of population living in cities),
(ii) high GDP-PPP adjustedper capita (USD 17,000 at par with Brazil and SouthAfrica),
(iii) low capitalization of the economy (equity market account 8% of GDP versus 29% in Turkey and 44% in Brazil),
(iv) structural limitations for local banks to raise capital through local deposits and
(v) high entry barrier for foreign investors.
The progressive integration of Iranian banking institutions within the global banking system is expected to underpin material FDIs (currently below 0.5% of GDP versus approximately 2.0% in Turkey and 4.0% in Brazil) which will support the Country’s long term economic growth.