Idan Veles, Yitzhak Tshuva (Photo from the Delek Group website, Flash 90/ Moshe Shai)
What has not been written about this company, what has not been said about its controlling owners and what has not been whispered about its young management. But still, the truth about this company, its controlling owners and the young management – you tripled the money and that in one year of upheavals in the stock market.
If so, Delek Group’s share, yes the one that only a year or a year and a half ago there were those who were counting the minutes to its collapse and all the “lily” portfolios were updated accordingly – it is the stock of the year on the stock exchange. A stock that yielded no less than 194% in 2015 and this despite all the mess in the markets (and yes, despite the rise in oil prices) and the crazy (and justified?!) rush for cash and bank deposits.
More in-
If so, the Delek Group should be analyzed in three parts: how it got to the crisis, how it got out of it and what awaits it in the future.
But how did the company enter the crisis? By and large, the vision of Yitzhak Tshuva or Hash Shaikhan created him through his gambling or his adventurism. Somewhere in the previous decade, Delek Group acquired Ithaca, the oil assets in the North Sea in a deal of more than 2 billion dollars and then everything went wrong. Oil prices lost their height, the markets were shaken, the banks were under pressure, but this is history.
Tshuva stood behind the company. He poured in money, realized assets, but in light of the pressure from the banks and the bondholders, it seemed that none of this was enough. If we add to the story the appointment of Idan Velas, an unknown figure in the capital market, a young CEO who managed Tshuva’s private assets, then The fear that Tesveva is trying to legalize a debt settlement.
But neither Tsheva nor Wells raised their hands, nor did the bond holders, and from here the history continues. But we were left with the future, after Tsheva and Wells stabilized the system, value should begin to flow and here it is worth expanding a little.
In principle, an investment in the Delek Group is exposure to oil/natural gas, including to the world of energy (Neomed Energy recently entered the world of renewable energy) and there is no need to analyze the oil and energy market too much, we do it on an ongoing basis. But the real value spill is in Ithaca’s IPO.
When we tried to find out before the mess in the markets where the issue stands, what is the value they are asking for, how much do they want to issue and how much of it will be in the sales offer, we received estimates from the capital market that night. But it was clear to everyone, the value of Ithaca for the purpose of the offering is 5 billion dollars, the order of a billion dollars will be issued and the question of how much of that will be in the offer for sale, did not receive an answer from the capital market operators.
Now, several things have happened since then: the first thing is that underwriters were chosen for the IPO and this brings us very close to it. In principle, no underwriter will undertake an issue if he does not know when it will be, if at all. So we got the answer to this question.
The second thing that happened is the decline in the markets. Here we understand that something has fallen. The capital market this year will not be like last year and certainly not like the year before and this should in the pessimistic scenario project negatively on the value of the company. That is, the dream of a 5 billion dollar value is getting further and further away.
The third thing that happened is the fact that we don’t see a solution of the West with Russia in the foreseeable future and that means – pressure on oil prices. Let’s repeat things, high oil prices are good for Delek Group. Now how much will the pressure positively affect net prices and how much will this effect be offset by the crisis in the markets? Not clear, but these two figures pull each in a different direction.
One way or another, as of the end of 2015 and the beginning of 2015, Delek Group’s stock was the star of the year.
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