LONDON (Reuters) - A Swedish firm is looking to launch the first initial public offering to raise capital for investments in Iran since international sanctions on Tehran were lifted.

But the precautions it takes to demonstrate that its dealings are legitimate show that the undertaking, even on this small scale, is time-consuming and costly.

Although global trade sanctions against Iran were lifted in January in return for Tehran curbing its nuclear program, the United States still forbids its own nationals and firms to do business in Iran, and prohibits dealings with a list of Specially Designated Nationals (SDNs) deemed to engage in undesirable or terrorist activity.

For those reasons, Pomegranate Investment AB, set up in Sweden in 2014, is entering the Iranian market cautiously.

Chief executive Florian Hellmich told Reuters on a visit to London on Monday that the firm, which has raised 80 million euros ($91 million) from European investors since 2014 in anticipation of sanctions easing, hopes to launch its IPO in Sweden within 12 months, for invest‎ments in Iran’s consumer technology sector.

He declined to say how much it might raise, but U.S. and Canadian citizens and corporations will be excluded from the offer.

To avoid any risk of infringing a ban on dollar payments to or from Iran passing through U.S. financial institutions - one that still frightens European banks, some of which received heavy U.S. penalties for doing business in Iran - all transactions are done in euros.

The main challenge for any international company, however, is vetting Iranian partners to ensure they are not on the U.S. blacklist.

“We have learned to operate in a sanctions environment, which means we have had to engage in a high amount of KYC (“Know Your Customer”): legal due diligence of all our partners, including the banks we do business with,” Hellmich said on a visit to London.

Many Iranian companies have beneficial owners who are not easily traceable, making it hard to be certain that investments will not end up, for instance, going into the wide-ranging business empire of the hardline Revolutionary Guards Corps, which the United States accuses of sponsoring terrorism.

“We have engaged an armada of lawyers who have been advising us in terms of disclaimers and due diligence. Again it comes back to the cost of doing business. It is time-consuming,” Hellmich said.

“This is also where the opportunity is - everyone could have done the work we have done, but nobody has.”

Hellmich, a veteran of emerging markets including Russia who was previously with the Moscow-headquartered investment bank Renaissance Capital, said Pomegranate was working with a “combination of Swedish banks and Swiss banks”, but declined to be more specific.

“We found regional banks with no U.S. exposure a lot more accommodating in how we do business,” he said.

Around 50 percent of Pomegranate’s shareholders are from Sweden, including the prominent investor Per Brilioth, and others come from Britain, Switzerland and elsewhere in Europe.

“There are plenty of liquidity pools in Europe to be successful,” Hellmich said.

The firm has already taken minority stakes in Iranian companies including the Internet and e-commerce company Sarava and Iran’s second largest online classifieds company Sheypoor.