Harel to raise stake in Jerusalem light rail

It is not known with whom Harel is in talks, or at what valuation for Citypass.

25 May 10 16:11, Ron Stein and Amiram Barkat

Harel Insurance Investments and Financial Services Ltd. (TASE: HARL) plans to increase its stake in the Jerusalem light railway franchisee Citypass, Harel chairman Yair Hamburger told Citypass' board of directors today. The investment will be made indirectly through the Israel Infrastructure Fund, which it controls, and possibly directly as well. Hamburger added that he was resigning as chairman of Citypass after five years.

It is not known with whom Harel is in talks, or at what valuation for Citypass. However, TASE sources believe that Citypass shareholders Ashtrom Properties Ltd. (TASE:ASPR), Polar Investments Ltd. (TASE: PLR), and France's Alstom SA (LSE: ALS; Euronext: ALO), which owns 58% of the franchise altogether, are at the center of any deal. Harel currently owns 20% of Citypass.

Names mooted to replace Hamburger as Citypass chairman include outgoing Bank Leumi (TASE: LUMI) chairman Eitan Raff, former Minister of Finance and Israel Infrastructure Fund chairman Avraham Shochat.

In 2008, the Israel Infrastructure Fund acquired 10% of Citypass from Polar Investments at a company value of NIS 40-50 million, and received an option for the rest of Polar's 17.5% stake. Industry sources say that any current deal for Citypass would be at around the same company value as in the Polar transaction.

Citypass said today that Israel Infrastructure Fund is in talks to increase its stake in the franchisee, "in view of the great confidence of Harel and the Israel Infrastructure Fund's investment committee in the project, and the return that will give its investors, especially considering the expected completion of the project next year."

Published by Globes [online], Israel business news - www.globes-online.com - on May 25, 2010

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