Leumi Partners Ltd., the investment banking arm of Bank Leumi (TASE: LUMI), is expected to invest up to NIS 80 million in the IPO of infrastructure and construction company Shapir Engineering. The investment will constitute 15-20% of the total amount that the company is seeking to raise, sources inform "Globes."
Leumi Partners, which will be the underwriter in the Shapir offering, has already negotiated in the past for an investment in the company at a value similar to the value for the planned IPO (NIS 1.9 billion), based on a NIS 2.1-2.4 billion evaluation of the company. That investment was eventually disallowed, because Shapir is considered a substantial debtor of Bank Leumi, and such an investment required a change in covenants that the bank refused to make.
Towards the investment institution stage of its IPO, which will take place tomorrow, Shapir, controlled by the four Shapira brothers, published an additional prospectus indicating that the company was seeking to raise up to NIS 460 million. The minimum company value for the offering is NIS 1.8 billion, before money. In addition to Leumi Partners, the leading underwriters include Poalim IBI Underwriting and Investments (TASE: PIU), Apax Partners, and Excellence Investments Ltd. (TASE: EXCE).
Shapir attached its third quarter financial reports to its prospectus. The company finished the third quarter with a NIS 107 million net profit, compared with a NIS 45 million loss in the corresponding quarter last year. NIS 55 million, half of the quarterly profit, resulted from the discontinuation of consolidation of the results of infrastructure business in Romania (Shapir Buildings Holdings), which has experienced difficulties and entered a stay of proceedings, with control of the company being transferred to a special manager. The retained earnings come from current activity.
The Shapir group started doing business in 1968, and currently operates in four main spheres: manufacturing and the sale and transportation of raw materials for the construction sector (industry), infrastructure and building construction projects (infrastructure), construction and operation of national projects financed by the private sector (franchises), and residential housing development.
Shapir's IPO is expected to be one of the largest on the Tel Aviv Stock Exchange (TASE) in recent years, and is likely to make the company the sixth to be listed on the TASE through an IPO in 2014. It cannot be ruled out that in the coming months, after the financing round is completed, Shapir will raise a significant amount of debt.
At the beginning of the week, S&P Maalot granted Shapir an A+ credit rating with a stable outlook for a bond issue of up to NIS 600 million, subject to its capital offering.
Published by Globes [online], Israel business news - www.globes-online.com - on November 26, 2014
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