"Globes" can for the first time reveal Azrieli Group's figures in advance of its forthcoming offering. The Azrieli issue, one of the largest on the Israeli capital market in recent years, is expected to happen in May. The group is controlled by David Azrieli (88), who was born in Poland and reached what was then Palestine in 1942, where he studied architecture at the Technion. Azrieli lost his family in the Holocaust. He fought in Israel's War of Independence, in which he was wounded in the battle of Latrun, before eventually moving to Canada, where he has lived most of his life. The group plans to offer 25% of its shares to the public at a valuation for the company of NIS 10 billion after the money. This means that the group will immediately join the Tel Aviv 25 list at number ten in size. The value of the group for the purposes of the flotation will be NIS 7.5 billion before the money, on the basis of shareholders' equity of NIS 7 billion.
Azrieli will raise NIS 2.5 billion, all of which will go to the company, hence the after money valuation of NIS 19 billion.
Sources inform "Globes" that on Thursday afternoon, the four underwriters that will lead the offering met for the first time: Tal Rubinstein of Clal Finance Underwriting, Danny Barak of Leader, Ronen Zelnir of Poalim IBI-Managing & Underwriting, and Ofer Greenbaum of Leumi Underwriters. The object of the meeting, which was also attended by Azrieli Group VP Finance Yuval Bronstein, was to discuss progress in the offering. The milestones on ehe way to the offering, which is due to take place after Israel's Independence Day, were agreed.
"Azrieli isn't greedy," a source close to the group who is involved in the flotation told "Globes". "Although similar income producing real estate companies like British Israel, Melisron, and Amot, are traded at multiples of 1.1-1.3 on shareholders' equity, the Azrieli Group offering will be at a low multiple of 1.05. Azreili wants the offering to be generous, so that everyone will profit, and so that there will be an upside for those who buy the shares."
A capital market source who is an expert on valuations told "Globes" that since the offering would be huge, of a size the market is not used to, "for the market to absorb the offering, the price has to be good."
Azrieli Group is one of the largest privately held companies in Israel. It owns 11 malls, 20% of credit card company Leumi Card, 4.8% of Bank Leumi (TASE: LUMI), and it controls Granite Hacarmel Investments (TASE: GRNT) (60.8%), which holds fuel company Sonol, Supergas, water technology company GES, and paints company Tambour. The group also holds venture capital firm Azritech Ventures.
The group's real estate assets are valued at NIS 11 billion, of which the Azrieli Center in Tel Aviv acounts for NIS 3.5 billion.
For 2009, Azriel Group, managed by Gen. (res.) Menachem Einan, is expected to report a net profit for 2009 of some NIS 1 billion, which includes capital gains of NIS 430 million on a successful investment in shares of Bank Leumi. Einan, Azrieli's right-hand man, is believed likely to receive shares in the offering.
Published by Globes [online], Israel business news - www.globes-online.com - on March 14, 2010
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