2024-01-20 13:08:36
“Our first strategy is to bring a maximum return for the partners, with as little risk as possible, and along the way we also provide and mobilize for the sake of the state,” says Joanna Weissman, director of credit, guarantees and infrastructure equity at Menorah Mivathim, not only an insurance company, but one of the largest companies in the industry which is careful to choose its investments and partnerships in projects for the sake of building the state and developing the local economy. “Being a growing and stable economy with a high demographic provides many opportunities and allows us to invest and take part in a variety of local investments that both generate returns and contribute to the growth of the State of Israel.”
Joanna Weissman (Photo: Yehats)
Weissman explains that the advantage of Menorah Mivathim as an institutional body allows first of all investments in large amounts, “it is an activity in which each investment can amount to hundreds of billions of shekels, and smaller investments totaling several hundred million for that matter. In addition, we are also active in equity, which is an investment in the projects themselves, in senior and subordinated debt and in investment funds. So we look at the project from every angle and decide where the risk-return ratio is the most interesting.”
National projects
One of the company’s interesting areas of investment is in the field of infrastructure, where it helps finance national road projects, green energy, Ministry of Defense projects, pumped storage, data centers, and more. These are projects that are the result of cooperation between the financial sector and the public sector, and these financings are often in the range of several billions, so Menorah Mivatim are part of a number of financiers.
Examples of prominent transactions from Menorah Mitvatim’s last year in the field of infrastructure are the financing of the purple line and the green line in Gush Dan, with an aggregate financing amount of over one billion shekels, “We are part of the ownership of Route 6. This year we approved additional investments, both from the equity side and with an additional significant debt of hundreds Millions of shekels, for the expansion of the road – which includes adding a lane in both directions (on the part of the toll road from the Kesem interchange to the Ein Tut interchange) as well as several new interchanges.”
Visualization of the purple line in Tel Aviv (photo: Yachats)
Weissman adds that the partners see the return through interest returns, “or we make an equity investment where we become part of the owner in the project, and then the return we see is through the dividends or the profits of the property. In both ways, we look at it with a long-term vision. We are less focused on a transaction with an exit after two or three years in the exit. Sometimes it happens and it’s nice, but that’s not the strategy.”
The geographical distribution of the selected projects in the fields of infrastructure is across the length and breadth of the country, whether Ashdod port, equity and debt investment in the Hagit and Ramat Hovav power plants, financing of solar fields and more. Along with projects of great national importance such as the city of the Behadim at the Negev junction, an older and successful project, and the IDF’s logistics centers, a project which is the relocation of the IDF’s logistics centers from the center of the country to three central logistics centers, and Kiryat HaModi’in – a project that includes financing, Planning, construction, operation and maintenance. This is a project that was signed in 2022, “and we are investing there in the amount of over NIS 600 million,” Weissman says, adding that the projects are accompanied by collaborations with Israeli financial entities, and are spread all over the country – from Hariya in the north to Eilat in the south, within the Green Line and beyond – in all A place where blue and white projects are built – for all citizens of the country. “We are proud to be at all the important junctions of the country in its development.”
The light rail (Photo: Ariel Bashor)
How are the projects selected?
“There is a huge range of transactions. But with all our desire to support and take part in as many projects as possible in Israel, we end up choosing them with tweezers”, says Roi Brilant, manager of the infrastructure department at Menorah Mitvahim. “We are a very small country, the money to be invested is a lot, and we have an excellent reputation. As part of the summaries of the past year, it may be time to point out that in the last year we received over 200 investment opportunities in the amount of NIS 50 billion, but I spend most of the day saying no. The deals are a careful choice, in the end there is allocation according to sectors, and not every body that offers us a deal is necessarily the ultimate choice for us. In most transactions and certainly in equity, we do not manage the business, we are not allowed by regulation, and we receive reports and follow up of course. But when choosing a project, what is important is first of all the partner, the location, the geography, the deal, the yield, which is better. And sometimes there are two good deals and we choose the one that is better. It’s a matter of alternatives.”
Roi Berlint (Photo: Public Relations)
urban renewal
Berlinet would like to point out that in each transaction a certain percentage is invested by the partners, but Menora also participates with its own capital. “We also take into account ESG aspects in our investments”, adds Weissman, “it is important to us that our partners and the entities involved in the various investments should be aware of this and emphasize it. We also have our own strategic policy, we choose what matches our risk levels, what we want to finance, what we don’t want to finance. We have deals sometimes that are ‘Taylor Made’. We sometimes build a deal with a client that brings added value to our colleagues. In the end, I build a deal that is very compatible with our needs and where we try to reduce the risk and improve the yield.”
But we are not only dealing with infrastructures, but also in the field of real estate, the company has a lot of involvement and Menorah Mivatim has been active for over two decades in the field of financing and accompanying entrepreneurs who build residential projects, a field that is currently experiencing some upheavals from several directions, when the investments are also in the field of yielding real estate – trading and offices. The company accompanies, among other things, projects being built in the periphery – for example in Netivot, Dimona, Sderot, Acre and Afula. Alongside more niche projects, such as the Tidhar project on Rothschild Boulevard at the corner of Herzl in Tel Aviv.
Wiseman: “Menorah has a considerable scope of urban renewal projects of various types that we have accompanied. These projects have a double importance in the national view. On the one hand – increasing the supply of apartments in a market characterized by a chronic shortage for decades. And in addition, upgrading the old apartments of the apartment owners and adapting them to current earthquake standards. At a time like this it is of national importance. In addition, we financed several companies in the field of urban renewal and even made several transactions of financing companies in the field and investing on the side of Equity, for example the Ram Moghrabi transaction. The ability to finance a company and invest in it is a huge advantage for institutions because it enables a comprehensive solution for the entrepreneur.”
There is still a crisis in the rental housing sector, and it is a model that is more difficult to finance.
“The yields are lower. And yet we have recently financed several rental housing projects. This is a response to the housing crisis for young populations, from the institutionalization of the rental world. An example of this is a deal signed in 2022 with the Ashstrom Group. The agreement includes the construction of 504 housing units in Gindi’s new complex in the Neve Ayalon neighborhood in Or Yehuda, which goes by the name ‘Gindi the settlement’. This is a deal worth about NIS 500 million.”
What is happening in the field of real estate, especially during the war?
“Even before the war, the increase in interest rates in the last year hurt the financing ability of developers and also the ability of consumers to buy apartments, the legal reform also affected sales in projects mainly in the Tel Aviv area and the latest blow in the field is the war which also affects the ability to build in light of the lack of workers and harms the will and ability of people buy apartments Admittedly, there was a recent drop in interest rates and as long as the trend continues entrepreneurs will perhaps feel more comfortable. There is also a lot of uncertainty that stops the market a bit. I believe things will open up eventually. In the end, people will have to live somewhere, and there will have to be construction and projects, and when they come to us, we will examine them.”
To what extent does the war affect current and also future projects?
Roy Brilant: “It takes a little more time to plan things, and it could very well be that the closing of the Green Line is delayed a bit because of the war, or a delay in a project that is nearing construction and due to a lack of manpower or a delayed supply chain, that’s more effects. But at the planning level everything that is supposed to happen happens, and if someone planned something or in some kind of creative process it didn’t really have an effect. But what is more, it may be that at the strategic level following the situation, the government may draw conclusions that we should not depend on one power plant or another, that it may be better to disperse, and it is possible that this very situation will give a boost to the plans that need to be expanded. Bottom line, in practice, things are stable and the only effect is on the schedule.”
“Our teams have grown over the years,” says Weissman, “and we have people whose expertise is this. Over the years, we have brought to the company professionals in every sector. I have been working in the field for many years and at the time there were only a few employees dealing in the non-tradable field, it was a field they were not familiar with. Today, every institutional body has a lot of employees who deal with this field, which has flourished, because the institutional bodies understood the importance of this activity. We have to remember that there will soon be many infrastructure projects here. The country is still young in this field and more railway, metro, etc. projects will be implemented We hereby believe that we will continue to be an active and dominant part in these areas. As an institutional body that manages the largest pension fund in the country, the amounts we will manage are expected to grow over the years – and so will our investments.”
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