Sources inform ''Globes'' that Africa-Israel Investments Ltd. (TASE:AFIL; Pink Sheets:AFIVY), controlled by chairman Lev Leviev, is in preliminary talks with financial institutions for sell of a number of assets. The first item up for sale is the company's 37.5% stake in Derekh Eretz Highways Ltd., the franchisee of Road 6 (the Yitzhak Rabin Highway, also known as the Cross Israel Highway), at a company value of $400 million.
Africa-Israel subsidiary Africa-Israel Properties Ltd. (TASE: AFPR) sold its stake in five malls to Azrieli Group earlier this month for NIS 1.8 billion.
Derekh Eretz's other owners are Shari Arison's Housing and Construction Holding Co. Ltd. (Shikun u'Binui) (TASE: HUCN) also with a 37.5% stake, and Canada's Aecon Group (TSX: ARE), with 25%. Both have first refusal rights and market sources believe that one of the partners may buy Africa-Israel's holding. If it sells the stake to a third party, either Housing and Construction or Aecon, or both of them, may also sell their holdings in the company.
Belying its detractors, the Yitzhak Rabin Highway toll road has proven to have been an excellent investment. Derekh Eretz posted a net profit of NIS 84 million for the first quarter of 2008, compared with NIS 15.9 million for the corresponding quarter of last year. The highway currently extends 120 kilometers, and construction is ongoing at both ends north and south.
Potential buyers for Africa-Israel's infrastructure holdings include institutional investors, especially insurance companies. They would be interested because the projects have already moved from the construction to the operational stage and Africa-Israel operates as a financial investor that enjoys regular income guaranteed for decades to come.
Provident and pensions funds, which manage hundreds of millions of shekels, are seeking just this kind of low-risk, fixed yield investment.
Published by Globes [online], Israel business news - www.globes-online.com - on July 29, 2008
© Copyright of Globes Publisher Itonut (1983) Ltd. 2008