Due to the nature and the available facilities of Theta-Energy Co. and also considering the existent regulations, our company utilize the variety of different instruments for financing projects regarding the amount of the attracted investment and also the current projects’ conditions.
Among the major mentioned instruments are the following:
- The project investment fund in the stock market.
- The project investment fund outside the stock market.
- Debt-based instruments.
- Capital-based instruments.
- Structured financial instruments.
The project investment fund in the stock market.
The project investment fund is a financial institute, established under the license of the Securities and Exchange Organization which collects the public capital and allocate it to the particular projects, specified in the statute of the fund. Regarding the defined performance of these funds and along with the project’s progress, the investors are benefited from the rise in the prices of the tradable investments’ units in the capital market. Moreover, increasing the project assets’ value due to factors such as inflation or increasing the exchange rate would cover the investors’ risk in this field. Other advantages of this new financing instrument are decreasing the time for underwriting contracts and increasing the capital, not requiring to register the capital changes in the companies’ registration authority, the possibility of separating the ownership from project management, eliminating the transformation tax of the fund’s investment units and the possibility of directing small investments toward infrastructure projects with the minimum rate of the guaranteed long-term interest.
The project investment fund outside the stock market.
The project investment funds outside the stock market are codified in the form of a Private Equity Fund and their establishment is only possible through the association and supervision the Securities and Exchange Organization. Contrary to the project investment fund inside the exchange market which are being financed through the capital market, their financing is supplied in non-exchange funds and through private banking sector, commercial banks, projects’ introduction meetings to different groups of natural and legal entities such as investment companies, retirement funds and insurance companies.
Debenture (bonds) is one the main financing instruments in many countries, through which they are able to supply their required financial resources by issuing bonds, liabilities or debentures. Government bonds, corporate bonds municipal bond, zero-coupon bond (also discount bond) are other types of debentures/bonds. The use of bonds in the Islamic financial system would be considered as usury and is denounced, thus other corresponding instruments with Islamic law are applied in Iran, such as participation papers, varieties of Sukuk and certificates of deposit.
Participation papers are registered or bearer securities, which according to the Law for Issuance of Participation Papers, are issued with a specified nominal value for a specific period of time; and are assigned to the investors who intend to participate in implementation of profitable government development projects, included in the Annual Budget law of the country, as well as in profitable productive, construction and services projects, governmental corporations, Municipalities, non-governmental public institutions and organizations, public utility institutions, their Subsidiary companies, public and privately- held companies.
Holders of such papers are entitled to their share of profit, resulted from implementation of the projects, which shall be proportionate to the nominal value and period of participation.
Islamic Financial Certificates (SUKUK)
Islamic Financial Certificates (SUKUK) are tradable securities of equal denomination representing individual ownership interests in a portfolio of eligible existing or future assets based on the Islamic approved contracts.
Different types of Sukuk, according to Accounting and Auditing Organization of Islamic financial institutions (AAOIFI), are as following:
- Sukuk Al ijara (assets)
- Sukuk Murabaha (debt)
- Sukuk Al istisna (projects)
- deferred delivery purchase Sukuk
- ownership interests of existing assets Sukuk
- ownership interests in the assets created in the future Sukuk
- Sukuk Al salam
- Sukuk al mudaraba
- investment representative Sukuk
- Sukukal Mozara‘ah
- Sukukal Musaqāh
- Sukuk for offering services
- Franchise Sukuk
- Intrest-free loan Sukuk
Time deposit certificates for investment (Specific)
Time deposit certificates for investment (Specific) is referred to a kind of a money deposit at a banking institution for financing specific new profitable productive, constructive, services and also development and completion the existing profitable projects with defined maturity. The time deposit certificates for investment (Specific) certificate will be issued in return for opening the deposit.
Capital – based instruments
Capital-based instruments are also one of the financing instruments which involves transferring part of the project’s interest in exchange of receiving capital. In the other word, the required capital is funded through cash and non-cash investments of shareholders and increasing the equity of the company or the project. Shareholders’ investments are used in promoting project’s activities and the future gained profit will be also distributed among the shareholders.
Raising capital, Formation of joint stock companies, admission to the exchange stock and OTC markets, conversion from privately held company to public company.
Structured financial instruments
This instruments are one of the most important sections of the financial industry and help enhancing the liquidity and transferring risk using complex legal and corporate entities. This transfer of risk, as applied to the securitization of various financial assets which is applied to the securitization of various financial assets. Securitization is the financial practice of pooling various types of contractual debt and selling their related cash flows to third party investors as securities. Mortgage – backed securities (MBS) and Asset–backed securities (ABS) are the most common types of this kind of instrument.