U.S. investors are at risk of getting shut out of deals in Iran while
their European competitors get a head start on billions of dollars in
opportunities unlocked by the lifting of international sanctions,
according to Greylock Capital Management.
“It seems like the U.S.
might miss this opportunity because the Europeans are going to move
regardless,” Hans Humes, Greylock’s chief executive officer and chairman
who
traveled
to Iran in June, said in an interview in Mexico City. “It almost
doesn’t matter what the U.S. does because once it starts opening up to
Europe I think the economy in Iran will start to move.”
Foreign investors and multinationals are
lining up
to return to Iran after last year’s historic nuclear deal led to the
lifting of international sanctions in January. Until then, firms were
prevented from transferring money in and out of the Islamic Republic,
whose $370 billion economy is projected to grow 5.8 percent this year.
While European companies like German automaker
Daimler AG
and France’s Airbus Group SE have already signed deals, American
citizens and companies remain limited because the U.S. has kept some of
its own restrictions tied to accusations of terrorism and human rights
abuses.
Changing
the Treasury Department’s Iran policy toward processing payments would
“open things up,” said Humes. His New York-based hedge fund, which
oversees about $1 billion, focuses on distressed and high-yielding
emerging-market debt.
The U.S. severed ties with Iran a year after
the 1979 Islamic revolution that toppled American ally Shah Mohammad
Reza Pahlavi and led to the U.S. embassy hostage crisis in Tehran.
President Barack Obama
initiated a detente in 2013, eventually sealing an international
accord
with Iran, despite Republican lawmakers’ opposition. Republican
presidential candidates Marco Rubio, Donald Trump and Ted Cruz have all
pledged to either nullify or renegotiate the terms of the deal.
Energy, Infrastructure
Humes
sees the biggest opportunities in Iran’s energy, infrastructure and
corporate services. He said that the investment opportunities may be
worth “multiple tens of billions” of dollars in the next five to 10
years, assuming political stability. Iran’s main stock gauge, the TEDPIX
Index, advanced 27 percent in 2016 through Sunday to close near the
highest level in about two years.
Europe
is likely to get in first with banks there hopefully starting to ramp
up transactions with Iranian lenders in the next year, Humes said.
Meanwhile, the entrance of U.S. institutional investors still likely two
to three years away, he added.
Iran needs $15 billion per year
for infrastructure projects and the modernization of its transport
sectors, Abbas Akhoundi, the minister for roads and urban development,
said during a conference for foreign investors in Tehran this weekend.
“Everybody
sees the opportunity in Iran,” Humes said. “It’s going to happen and
the trigger for that will just be the payment system opening up.”
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