Yitzhak Tshuva-controlled Delek Group Ltd. (TASE: DLEKG) today announced that it had invested NIS 680 million in the shares of energy companies. The group stated that these acquisitions had been "in the framework of a strategy of focusing on the energy sector, with an emphasis on finding new international opportunities," and that the purchased shares were "shares in foreign companies doing business in the oil and gas industry."
It appears that a significant proportion of the amount paid for the shares reported by Delek Group was earmarked for buying shares in Australian company Woodside, which until recently was negotiating a partnership in the Leviathan natural gas reservoir. Delek Group added, "The company plans to continue buying financial assets using bank credit and its own independent resources."
These acquisitions follow the recent plunge in many oil shares around the world, caused by the double-digit percentage fall in oil prices within a few months. As part of its strategy, it is probable that Delek Group is planning to continue adding to its holdings in those companies, thereby becoming a party at interest in them.
Delek Group has already made successful purchases of energy shares in the past, earning hundreds of millions of shekels in profits in 2011 on an investment in Noble Energy, its US partner in drilling in Israel. These profits were posted less than two years after the company announced its purchase of shares in Noble Energy, following a leap in that company's share price at the time.
Business focus and planned LSE flotation
In the course of its latest share purchases, Delek Group is using its cash balances obtained from its recent sell-offs. These yielded a NIS 1.8 billion cash flow in the third quarter, giving the group cash on hand totaling NIS 5.2 billion (consolidated) and NIS 2.5 billion (solo).
Delek Group has sold many substantial assets recently in the process of changing its focus in favor of its core business in the energy and gas sectors, selling its UK Roadchef motorway services company, nostro company Barak Capital, and Delek Europe. When its financial reports were published at the end of November, Delek Group CEO Asaf Bartfeld said, "We'll continue with the group's strategy of focusing on oil and gas exploration in the coming quarters."
The share purchases are taking place ahead of the group's planned flotation on the London Stock Exchange (LSE), based on its 2014 financial statements. Delek Group hopes that its share will be listed on the FTSE Index early in 2015, and recently announced that Tshuva was joining its board of directors. The group's share lost 10% of its value over the past year, and is now traded on the TASE at a NIS 14 billion market cap, making it the 10th largest company on the TASE.
Published by Globes [online], Israel business news - www.globes-online.com - on December 3, 2014
© Copyright of Globes Publisher Itonut (1983) Ltd. 2014