After several delays and despite the collapses recorded on stock exchanges around the world in recent weeks, Alrov Real Estate was able to issue the activities of its subsidiary in Switzerland – Epic Swiss, on the Zurich Stock Exchange. The issue was completed at a value of 693 million Swiss francs (NIS 2.4 billion) The subsidiary, which raised an amount that could reach 203 million Swiss francs (NIS 706 million), on the assumption that it will exercise an option granted to it in the IPO.
Alrov Real Estate, controlled by Alfred Akirov and his family (73.5%), has reported intentions to issue its income-producing real estate operations in Switzerland several times in recent years. Now the move is complete when Afik Suisse is finally issued at a share price of 68 Swiss francs. This price is close to the lower threshold of the price planned for the issue, which ranges from 67 to 77 francs per share and was presented in the company’s report on the subject two weeks ago.
Alfred Akirov, chairman of Alrov Real Estate, told Globes on Wednesday that “there was great excitement on the Swiss stock exchange in view of the joining of the Swiss channel. This is a company issued at a value of 800 million Swiss francs – not a small amount. For expansion in the fields of industry, logistics, and also for the construction of buildings for the fields of biotechnology. “
Asked whether the company is satisfied with the price of the IPO, which is close to the lower target they set, Akirov replies that “in light of the situation today in the capital markets, there are no IPOs in Switzerland and in fact in the world. So given the situation – it is a good price.”
Why did you still decide to promote the offering despite the state of the markets?
“We have been in a road show process with the institutional investors in Switzerland for a month now. If in the end we did not complete the IPO – it would seem like a failure. We are also issuing at this stage only a quarter of the company.”
Akirov adds that the raising will allow Afik Suisse to lower its future financing costs, which may be to its advantage in periods of fluctuating and climbing interest rates. “Right now the amount we have raised is enough for us for everything we want to do. In addition, the capital market will now allow us to increase existing loans and raise more funds at lower debt costs,” he explains.
Previous IPO attempts have not been completed
As mentioned, the issuance of the activity in Switzerland is an issue that Alrov has considered several times. In 2016 it first announced that it was considering such a move, and subsequently a number of unfinished attempts were made. In September 2020 another, more tangible attempt was made, which included a published prospectus. It was a matter of issuing the Swiss bus at a value of NIS 2.9 billion, but in less than two weeks the intention was canceled due to the market conditions prevailing on the stock exchanges at the time. In the same year, the Corona plague broke out, but later in 2020 there was a relatively rapid recovery in the Swiss real estate market.
The issue was now led by the Swiss underwriters Credit Suisse and Discount Capital Underwriting from Israel, during which the company was granted an option to increase the issue by another 10%, up to 203 million Swiss francs, which can be exercised until June 24. Thus, after the issue, the public holding rate in Swiss Bus will range from 25.7% to 28.5%, depending on the exercise of the option. The holding rate of Alrov Real Estate will decrease to 55.7% (assuming the exercise of the option). The balance of the holdings is in the hands of the existing partners in the company. Afik Suisse distributed a dividend of 17.5 million Swiss francs (Alrov’s share) Will increase after that by NIS 662 million.
Properties in large business centers in the country
Afik Suisse owns 25 income-producing real estate properties in Switzerland, mainly commercial centers, offices and distribution centers. Prior to the IPO, Alrov Real Estate owned 77.8% of it, along with its historic partner, the Greenbaum family, which held the remaining shares (22.2%) on the eve of the IPO. A family fund (trust) located on the island of Jersey. The company’s assets are located mainly in the Lake Geneva area and in the vicinity of the city of Zurich, which is one of the largest business centers in the country.
Afiq Swiss property in Switzerland / Photo: The company’s website
The company began operations in 2004 with the acquisition of a shopping center in Switzerland, when in the following years it expanded, and in 2007 it opened a headquarters for the management in Zurich. Afik Suisse’s chairman is Roni Greenbaum, and since 2007, Eric Fritzer has been the CEO.
The company ended 2021 with comprehensive income – from rents from assets under management and other sources, amounting to 60.3 million Swiss francs, an increase of 6.8% compared to 2020. The company’s net profit jumped by 125% to 77.5 million Swiss francs, among others Thanks For revaluations carried out in its assets, and operating cash flow grew last year by 17.4% to 36.3 million Swiss francs.
On the Tel Aviv Stock Exchange, investors commented on the development, and Alrov Real Estate, which at the beginning of the trading day on Wednesday responded to the announcement with an increase of over 3%, moved to trading later in the day with a 2% drop in price, which gives the company a market value of NIS 4.3 billion.