"Globes" reports that Ormat Technologies Inc. (NYSE: ORA; TASE: ORMT), managed by CEO Isaac Angel and controlled by the FIMI Opportunity Funds, is acting to raise hundreds of millions of dollars in non-tradeable debt from Israel's financial institutions in order to recycle a loan under improved conditions.
According to market sources, local underwriting entities are currently discussing two raise options with the financial institutions a private loan or an issue of a series of non- tradeable bonds.
The raise is aimed at recycling an existing debt in a $250 million bond series offered by Ormat to financial institutions in 2010-2011 with a 7% interest, which is to be repaid in early August 2017. In the current offering, the interest would probably be only 3%-5%.
Financial institutions seek a return
In the past few years, private and non-tradeable credit has become a significant field of activity for Israel's large financial institutions. This is due to the large volume of funds they manage and the incessant need to find new investment options that will yield a fair return potential in a world of zero interest and fully- or over-priced assets.
Ormat, founded by the Bronicki family, is operating in the field of geothermal energy and deals with research, development and production of electrical power turbines and the development of renewable energy projects; it is traded on the Tel Aviv and New York stock exchanges at a market cap of $8.6 billion. Many financial institutions are currently shareholders, including Migdal Insurance and Financial Holdings Ltd. (TASE: MGDL) , Clal Insurance Enterprises Holdings Ltd. (TASE: CLIS), The Phoenix Holdings Ltd. (TASE: PHOE1;PHOE5), Psagot Investment House Ltd., Excellence Investments Ltd. (TASE: EXCE) and the US Vanguard Investments.
The company has operated in two sectors: products, in which it builds power plants for its clients; and power, in which it is also the plants' owner and operator. The company has adopted a strategy to expand its operations to other renewable energy sectors in the next few years and, as part of this strategy, signed an agreement in the field of energy storage.
The FIMI Funds became part of the company's controlling core in late 2011; since then, company shares have yielded a return of 120%. One of the key actions led by FIMI was the merging of Ormat Industries Ltd. and subsidiary Ormat Technologies Inc. in late 2014, which simplified the holdings structure. Moreover, it added a financial partner to some of the Ormat's assets in the US: about 18 months ago, Canada's Northleaf Capital fund paid $175 million for a 40% stake in a new company which gained control over several of Ormat's power plants in the US.
In the next week, Ormat will publish its second quarter statements. In the first quarter, it had a revenue of $152 million, with an adjusted EBITDA of $80.2 million and a net profit attributable to shareholders of $29.3 million. Ormat's annual forecast estimates a $620-640 million revenue and an adjusted EBITDA of $300-310 million.
The FIMI Funds, managed by CEO Ishay Davidi, is one of the top private equity investment entities operating in the local market, certainly in terms of investment in industrial firms.
FIMI is currently acting to profitably realize some of its holdings in Overseas Commerce at the Tel Aviv Stock Exchange, in what is intended to replicate the successful model by which FIMI substantially increased value in Inrom Construction Industries Ltd. (TASE: INRM) about two years ago. Alongside the Overseas Commerce issuing plans, Israel's largest and most successful private equity fund continues promoting further acquisitions, mainly of Kibbutz Maanit's Galam and the Bereshit fund.
FIMI Funds controls, inter alia, the companies Hadera Paper Ltd. (TASE: AIP; Pink Sheets: HAIPF) , Ham-Let (Israel-Canada) Ltd. (TASE: HAML), Magal Security and Rivulis Irrigation. The FIMI 6 fund is expected to invest about $250 million annually in four-five Israeli companies, with the first investment already made in controlling shares of Bet Shemesh Engines Ltd. (TASE: BSEN).
Published by Globes [online], Israel business news - www.globes-online.com - on July 31, 2016
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