TBY talks to Mohsen Memari, CEO of Ghadir Investment.
TBY Ghadir Investment is one of the biggest companies on Tehran's stock exchange. How did it come to be such a major economic actor?
MOHSEN MEMARI After the Revolution the banks had a large number of companies transferred to them, but the banks had no center to manage them. This company was created by Saderat Bank to manage some of these new subsidiary companies that came into its ownership. Little by little, these companies were managed and restructured to achieve profitability. And now, fortunately, we have created a company with a huge amount of capital and investments spread across many fields of the economy. Companies like Ghadir Investment have a lot of influence over Iran's economy.
In Iran, the economy can be analyzed by dividing it into three elements. First is the central government, and just as in every other country the government has influence over the economy’s performance. But as you know, in Iran the government still plays a large role in the economy. The second element to understanding the Iranian economy is the private sector, while the third is the cooperative companies that have been set up. The situation in Iran has been changing substantially and the private sector is having a larger influence over the direction of the economy. However, the further implementation of this strategy requires intermediary companies such as Ghadir Investment.
How would you define your role in the transition from a state-dominated to a more private sector-friendly economy?
We occupy a special position as an interface and link between the investor community and a wide variety of projects. We are here for the intermediate phase between state ownership and private sector leadership. Fortunately, the government in Iran responsibly noticed this matter and sought to provide us with the authority to exert our influence over aspects of the economy. For example, at the moment we own a number of large assets in the petrochemical sector. The government sold some petrochemical plants to us about five years ago and we have managed them and transformed them into profit centers. Our petrochemical companies reported profits of some $300 million in the previous year.
Besides being experts of management, what other characteristics does the company hold?
Not only the experts, we also have the proper connections to the government. We have the investor, we have the idea, now we have to organize and strategize this job together. We need to obtain permissions, and we are able to get permissions. We need a natural gas supply. We get the natural gas supply. We have the ability to talk to the various ministries in the government and successfully work out how to satisfy all the regulatory permissions needed for a project to go ahead. We were a semi-governmental organization, and so we understand how the government works and have worked together with it many times in the past. However, we are now a fully private company whose shareholders are all, without exception, from the private sector. Despite this, government offices have confidence in us because of our good background and sound economic performance.
Will you sell the companies grouped under Ghadir Investment to other private sector players?
We have some smaller companies that we are selling directly to the private sector. Little by little, though, our position will change from the smaller companies to the larger ones. Although, when we want to sell larger companies to the market we usually use the stock exchange as the preferred vehicle.
How many employees do you have here in management, and how many across the Ghadir group of companies?
In the main company headquarters we have about 50 people, though you have to remember we have five holding companies and each of these has a group of companies underneath it. Ghadir Investment has about 80 subsidiary companies with a total employee account of around 7,000 people. Our revenues in the past financial year amounted to about $20 billion, while our profits for the year were something in the range of $500 million. We have already surpassed this amount in the current financial year. Our strategy for the coming five years is to achieve annual profits of $1.2 billion.
Do you see Iran as a safe place for investment?
Yes. There are many different investment opportunities in Iran, and this is quite important. For example, in 2009 the stock market had a good year. We sold a company through some brokers on the stock market, and they received a 60% profit in one year. It is because of such gains that many expatriate Iranians want to come back to Iran and invest in our market. For example, we recently created a fund for expatriate Iranians and we are promoting it globally. As a result of this fund, we are able to support a number of projects in Iran. We have a lot of profitable projects going on locally in different fields, and the demand from expatriate Iranians to invest has been very strong.
How would you describe the investment strategy of your company?
Ghadir Investment tries to connect the government and the private sector, and the sources of wealth and the people. In this strategy we try to gather together all of the investment companies in Iran in order to improve the ability of the economy to generate wealth and create synergies between different enterprises. Ghadir Investment has some very talented staff, and our personnel all understand that what we do is more than about the aims of the company, it is also about the aims of the nation. We want to bring many investment companies together and through the synergies generated and various forms of syndication we can finance bigger and better projects that will benefit the future of the country.
What new projects are you thinking of investing in the areas of IT, tourism, and high-tech?
Along with our R&D division, we have looked a great deal into this matter and we are trying to find the best fields of investment that we can. We specialize in two kinds of business generally: asset-based and knowledge-based. We try to divide all businesses into these two broad groups, and we are looking to switch from being overweight in asset-based businesses and improve our coverage of knowledge-based businesses. We think that in the future the best business will come from knowledge-based enterprises, not asset-based businesses. For example, cement companies are asset-based, while tourism is more of a knowledge-based business.
We think we will be successful by switching little by little. We believe our strategy will be the new model for the other investment companies in Iran to follow, and I have tried to convince the other companies to consider this strategy.
At the moment we are thinking about the Ghadir brand. In the past people noticed that we had a good and credible name. At the moment, though, we don't use this added value that the brand can generate. It is time to market Ghadir Investment as a brand in itself.
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