Less than a year and a half after it came under the control of a company Blade L.R. And businessman Uri Mansour, Delek Israel is raising capital from the public through an initial public offering of its shares on the stock exchange. According to market estimates, the issue is expected to reflect Delek Israel’s value of about NIS 1.2 billion before the money, and give the new controlling shareholders a threefold return on the money in a little over a year. The issue of Delek Israel’s expected IPO was revealed in Globes about three months ago.
The estimated value of Delek Israel’s issue is derived from a multiplier of 8 on the Company’s projected operating profit (EBITDA) in 2022, less a financial debt and an additional discount that the market will require. If we assume EBITDA of NIS 220 million in 2022, which we multiply by 8 and reduce net financial debt by NIS 348 million, we get a value of NIS 1.41 billion, or a value of about NIS 1.2 billion after issuing an issue to participants in the issue.
For the time being, the prospectus does not include a sale offer from existing shareholders, but only the issuance of new shares by the company, to an extent that has not yet been finally determined. According to estimates, the company’s goal is to issue shares at a rate of 25% -30% from Delek Israel, so that this is a capital raising in the range of NIS 400-500 million.
The purpose of the compensation includes NIS 50-70 million for the acquisition of activities and expansion of the range of services, NIS 50-70 million for upgrading and expanding refueling complexes, NIS 20-40 million for expanding LPG operations (refueling vehicles with liquefied petroleum gas), and for financing current activities and reducing debts. The rest, a joint company was established with Zoko (an importer of Caterpillar in Israel) for the establishment of charging stations for electric vehicles.
As part of the cooperation, Zoko will invest the funds in setting up the charging stations, while 65% of the revenues will go to Delek Israel. The goal is to allow the vehicle to be charged within 10 minutes, within a driving distance of about 300 kilometers.
The real estate assets were split into a separate company
Delek Israel, established in 1951, operates 243 gas stations throughout Israel and another 203 convenience stores under the “Mint” and “Coffee Joe” brands. In October 2020, Yitzhak Tshuva’s Delek Group sold 70% of Delek Israel’s shares to Lahav L.R. and Uri Mansour (in equal parts) as part of a wave of realizations in its assets due to the deterioration in its financial position, for NIS 525 million and at a value of NIS 750 million to Delek Israel.
Later realized Blade L.R. An option received under the agreement and purchased another 5% of Delek Israel’s shares from Delek Group, for an additional sum of NIS 37.5 million, so that it currently holds 40% of the company’s shares. Since then, the new controlling shareholders have led a move to split Delek Israel’s income-producing real estate into a sister company called Delek Properties, so that the issued activity does not include the income-producing assets that Delek Israel had at the time of selling its control.
Lahav L.R. is controlled by Avi Levy (former CEO of Melisron), Eli Lahav and Ilik Rozensky. It recently reported that the court approved Delek Israel to make a capital reduction through a NIS 150 million cash distribution to shareholders, from which it received Lahav L.R. An amount of NIS 60 million. This amount is a return of 20% on the investment, which amounted to NIS 300 million.
Revenues in 2021 grew by 27% to NIS 2.72 billion
According to Delek Israel, since the change of ownership, a new management has been built, procedures and working methods have been formulated, specialization has been made in the retail world, about 60 complexes have been upgraded with an average investment of NIS 500,000 per station, investment in technological and operational infrastructure has been expanded. . At the same time, the company’s financial results improved, with (net) revenues from fuel sales increasing by 27% to NIS 2.718 billion in the first nine months of 2021, while gross profit grew by 40% to NIS 556 million.
Further noted Delek IsraelThe adjusted operating income (EBITDA) grew by 42% in January-September last year to NIS 143 million, while the net profit in this period amounted to NIS 68 million, compared with a loss of NIS 67 million in the corresponding period in 2020. It estimates that in 2021 as a whole, it recorded a gross profit of NIS 737 million, reflecting a growth of 32% compared to 2020 and an increase of 8% compared to 2019.
It should be noted that Delek Israel achieved the improvement in profitability, despite the payment of rent of NIS 55 million in 2021, for the use of income-producing real estate, which was transferred to the sister company Delek Properties, whose equity currently stands at NIS 500-600 million. , That the success of the issue will lead Lahav L.R. to hold shares worth NIS 480 million, after already receiving a dividend of NIS 60 million and holding 40% of Delek Properties shares, whose value is double the equity based on current multipliers in the market.