After failing last month in its attempt to hold an IPO for IC Power on Wall Street, Kenon Holdings Ltd (TASE:KEN: NYSE: KEN-WI), controlled by Idan Ofer, has begun to consider an IPO on the Tel Aviv Stock Exchange (TASE), either for IC Power or OPC, IC Power's subsidiary that handles its parent company's business in Israel.
IC Power attempted to offer 28% of its shares on Wall Street at a company value of $1 billion, which would have gained $300 million for Kenon. $145 million of this would have been given to Kenon for repayment of a loan granted for investments in Chinese automaker Qoros.
The attempted Wall Street offering was led by a respectable consortium of investment banks: Merrill Lynch, Credit Suisse, and Goldman Sachs. The underwriting arm of Leumi Partners Ltd. led the Israel part of the offering.
The offering was priced at $12-15 a share. The underwriters assert that the issue could have been a success at $12 the lower boundary of the price range, but capital market sources believe that the company wants a higher price, and is unwilling to settle for the lower boundary, and that investors therefore refrained from buying shares.
IC Power builds and operates power stations, mainly in South America (although the company also does business in Israel through its OPC subsidiary). The company has a total of 11 power stations, and is expected to report $450 million in EBITDA this year, after its two new South American power stations begin operating.
IC Power is to transfer a large part of the IPO proceeds, $145 million, to Kenon in repayment of a loan. In turn, Kenon is to give $200 million to Israel Corporation (TASE: ILCO) in repayment of a loan that comes due at the end of the year.
Current market conditions in Israel are ripe for almost any offering. It was formerly asserted that equity investors do not want to give companies a high value reflecting multiples that are acceptable on Wall Street. Recent equity offerings, however, such as those by Novolog (Pharm-Up 1966) Ltd. (TASE:NVLG) and Enlight Renewable Energy Solutions Ltd. (TASE:ENLT), which reflected extremely high multiples and which continued rising in the days following the offering, prove that the Israeli market has matured, and is closer than ever to overseas markets in it pricing capability. Demand for shares in the secondary market is also strong, with large share distributions and offerings being snapped up by investment institutions. This was the case with the distribution of shares by Oil Refineries Ltd. (TASE:ORL), Inrom Construction Industries Ltd. (TASE: INRM), Danel (Adir Yeoshua) Ltd. (TASE:DANE), Big Shopping Centers (2004) Ltd. (TASE:BIG), and Brack Capital Properties NV (TASE: BCNV).
Published by Globes [online], Israel Business News - www.globes-online.com - on March 2, 2017
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