Report: Saudi may sell firm’s stake in Iran
Savola, one of the few Saudi companies with a presence in Iran, may be sold in the wake of a diplomatic row between the two countries over the kingdom’s execution of a prominent cleric, a report says.
Iran provided 11% of Savola’s total revenue in the third quarter of 2015 and the company's revenues for Iran totaled 2 billion riyals ($534 million) in the first nine months of 2015, according to Reuters data.
Even before the fallout, the company was under scrutiny in Iran, with several lawmakers questioning Savola’s perceived monopoly over edible oils business in the country and local producers accusing it of dumping.
The Saudi company owns 80% of shares in Iran’s Behshahr Industrial Company which accounts for 40 percent of the country’s edible oil market.
It also holds 100% ownership in the Savola Behshahr Sugar Company, distribution firm Tolue Pakhshe Aftab and confectionery maker Modern Behtaam Royan Kaveh, according to the group’s annual report.
Savola acquired a 49% stake in Behshahr Industrial Company in 2004 before raising it to 80%. Behshahr is an important part of Savola’s business, accounting for 13% of its total revenues in 2014.
That year, the Iranian firm saw sales of $923 million, around 37% of Savola’s edible oils business.
One Iranian MP has said putting the market for a basic staple at the mercy of a foreigner is a security issue which has to be seriously tackled.
The Saudi government is reportedly the second-largest single shareholder in Savola through a 10% stake held by a social-insurance board.
On Monday, stock markets in the Persian Gulf Arab states fell after Saudi Arabia announced it was severing diplomatic ties with Iran.
The latest events are putting foreign investors in particular on edge, especially in the United Arab Emirates which is Iran's fourth largest trading partner.
The International Monetary Fund has estimated Iran’s return to the international trade fold could add 1 percentage point to the UAE's gross domestic product growth between 2016 and 2018.
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