The investment giant Blackrock recently made a significant purchase of shares in the geothermal energy company Ormat, and it now owns 12.5% of the share capital – the highest holding of an institutional body in Ormat (the Japanese company Oryx owns 19.7%, and is the company’s largest shareholder, since it acquired the holdings of the Fimi Foundation and the Bronitsky family in the company in 2017).
Blackrock owned 8.3% of Ormat’s shares in April, and later increased its holding, so that at the end of the second quarter of the year it owned about 9.2% of the shares. In a period of about a month – from the end of the second quarter until the first week of August – Blackrock purchased more Ormat shares, increasing as mentioned to the holding of 12.5% of the company’s shares.
At the average price of an Ormat share during that period, approximately $81.5, it is a purchase of shares at a cost of approximately $185 million. As of today, the value of Blackrock’s holding in Ormat reaches 644 million dollars. Ormat is traded on the New York and Tel Aviv stock exchanges according to a market value of 5.2 billion dollars, after a 37% increase in the share price in the last year.
A few months ago, Blackrock’s CEO, Larry Fink, estimated that despite the difficulties in the short term, due to the war in Ukraine, there will be an acceleration in the direction of green energy sources in large parts of the world. It was recently reported that Blackrock is investing $700 million in the purchase of the Australian company Akaysha Energy, which develops Energy storage solutions.
Ormat, managed by Doron Belsher, operates in the electricity sector, where it builds geothermal power plants and operates them under its own ownership, and in the products sector, where it builds such plants for others. At the same time, it also operates in the field of energy storage.
In the second quarter of this year, Ormat presented a 15.1% growth in revenues, to the level of 169 million dollars, of which 151 million dollars came from the electricity sector. The operating profit increased by 34.9% to 38.6 million dollars, despite an erosion in the gross profitability of the products segment, and the net profit attributable to shareholders (Non-GAAP) amounted to 12.2 million dollars, a decrease compared to 13 million dollars in the corresponding quarter. EBITDA, profit excluding interest, tax, depreciation and amortization, was approximately $101 million, an increase of 19.1%.
After the reports were published, the Oppenheimer Investment Bank raised the target price for Ormat shares from $85 to $97, a price that is currently 5.3% higher than the share price in New York. Oppenheimer’s analysts wrote at the time that the company exceeded market forecasts on both the top line and the bottom line, and left the annual forecast unchanged, adding that there are certain delays in the portfolio for 2023-2024 (among other things due to supply chain difficulties), but also that the company is managing to stabilize its capital costs.