Whoever believed in it gained bigtime: the share price of Electreon Wireless (TASE: ELWS), has risen by nearly 300% in the past year. The company, a developer of smart roads that has yet to post substantial revenue, now has a market cap of almost NIS 2.8 billion, making it worth hundreds of millions of shekels each to its main shareholders, on paper.
Two of those investors are known to the capital market for businesses in entirely different sectors. The first is Ran Belinkis, one of the founders of the AM:PM convenience store chain, and the second is Yizhaq Hajaj, one of the controlling shareholders in real estate developer Hagag Group, and currently the largest shareholder in Electreon.
Electreon was founded in 2013 by Oren Ezer, who serves as company chairperson and CEO, Hanan Rumbak, and others. It has developed technology for charging electric vehicles as they travel. It is currently carrying out collaborative projects with companies and organizations in the vehicle and transport sectors, mainly in the US and Europe.
The shareholders in the company, which became listed in 2018 through a merger into a stock market shell company, have themselves traveled a rocky road in the past few years. Since the low that the share price hit in December 2022, it has risen by 662% on the back of the electric vehicle trend. Nevertheless, the price is still a third below the peak that it reached three years ago. The company’s market cap puts it into the Tel Aviv 90 Index, with an average daily turnover in its shares of NIS 6.5 million.
Ran Belinkis holds 7% of Electreon. He was first reported as a party at interest in the company in 2021. He is estimated to have invested about NIS 100 million in buying the shares. At the low point, the value of that holding shrank to just NIS 30 million, but after the latest rise it is worth almost NIS 200 million, giving him a paper profit on the investment of nearly 100%. In 2006, together with his brother Gal and their partner Guy Edry, Belinkis sold the Tel Aviv-based convenience store chain AM:PM to fuel stations company Dor Alon for NIS 150 million. Since that exit, Belinkis has focused on developing his residential, office, and commercial real estate business in Tel Aviv, through his company City Boy.
Hajaj led a group of investors that bought Electreon shares in a private placement in June 2022 at a price of NIS 70 per share. He later increased his stake in the company, and altogether has bought shares to the tune of an estimated NIS 100 million. He currently owns 14.3% of the company, a stake worth about NIS 400 million - four times his investment. That, incidentally, is higher than the NIS 314 million value of his 30% stake in Hagag Group, which he controls together with his brother Eido.
Another large shareholder who believed in Electreon from the start is Yaron Jacobi, who is mainly active in real estate investment in the US. Jacobi holds 7.7% of Electreon, a stake worth NIS 214 million. Among the financial institutions in Israel, only one is a party at interest in the company, namely Clal Insurance, which holds a 7% stake, mainly through the provident funds that it manages, worth almost NIS 200 million. The company founders and managers Ezer and Rumbak each hold 13.4% of Electreon, worth over NIS 370 million.
Burning hundreds of millions
As far as the company’s business performance is concerned, in the first half of this year it recorded revenue of NIS 19 million, double the revenue in the corresponding period last year (revenue for 2023 as a whole was NIS 23 million). The figure derived from the recognition of revenue from projects in Germany, Israel, France, and the US. Electreon is still posting losses - NIS 37 million in the first half of this year, similar to the loss for the corresponding period - mainly because of heavy expenditure on research and development (NIS 27 million). Since it was founded in 2013, the company has burned through some NIS 360 million.
Although it posts losses at a rate of NIS 60-70 million annually, at the end of June this year it had over NIS 90 million cash, thanks to its ability to recruit more and more investment. Last September, it carried out a private placement of shares for NIS 50 million to a vehicle manufacturer the name of which it cannot disclose. In the past, the company gave options to Clal Insurance at an exercise price that, according to informed sources, is deeply in the money. If the options are exercised, that will inject another NIS 50 million into the company. Electreon thus has enough cash for two years of activity.
Electreon describes itself as a technology company that aspires to assist the switch to electric transport. It has developed unique wireless charging technology, including the infrastructure in the road, the hardware installed on the vehicle, and cloud-based software. The technology is designed to enable a vehicle’s battery to be charged rapidly and safely, to extend the vehicle’s range, to reduce overall maintenance costs, and to enable operators of electric vehicle fleets to decentralize charging, so that the vehicles can carry smaller batteries.
Despite the difficult year in Israel because of the war, Electreon has managed to develop and maintain its collaborations around the world, including in Norway, where it has a project for constructing a smart road for an urban bus company. Another collaboration is with delivery company UPS in the US, for charging electric vehicles in the company’s warehouses. In Israel, Electreon has been selected as the sole provider in a wireless charging project for Metronit bus routes in Haifa.
As part of a collaborative agreement with Japanese vehicle parts manufacturer Denso, the latter invested $10 million in Electreon last year and became a shareholder. Denso was spun off from Toyota, which holds 25% of the shares in it.
Electreon has also been encouraged by statements of Elon Musk at a much publicized Tesla company event two weeks ago, where he unveiled its Cybercab, an autonomous vehicle with no steering wheel or pedals. Musk said that these cabs would be charged by electric roads, which could give a further boost to Electreon’s field of business.
Published by Globes, Israel business news - en.globes.co.il - on October 29, 2024.
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