What exactly is Ampal? It is a US investment company that invests in what is termed "Israeli related businesses". The company's investments are very diverse. We will review them by category:
- Real Estate: Ampal holds 42.5% of Ophir Holdings, which has holdings in companies such as Industrial Buildings, Memco, Teledata, MainSoft (software development) and Shmay-Bar, engaged in commercial properties. Ampal has already sold most of its holdings in Teledata and Memco. Ampal holds 0.8% of Housing & Development, and 50% of ML, which builds and manages luxury retirement homes "Up to 120" in Rishon LeZion, and is currently building a luxury retirement home in Hod Hasharon.
- Ampal Israel and Ampal Financial Services have real estate holdings throughout Israel, while Ampal Realty is the US arm, with real estate holdings in the US. Ampal holds 100% of these three companies. Lev Hamifratz is a company that operates malls of that name, and 37% of it is held by Ampal.
- Industry: Ampal holds 21.5% of Granite Hacarmel, and 50% of Etz VeNi'ar, which owns Carmel Containers. The company holds 85% of the Paradise mattress plant and 50% of the MDF plant, which manufactures MDF planks.
- Tourism and vacationing: Ampal has 46% holdings in the Radisson Moriah hotel chain which is in the process of being sold. Ampal recorded the investment in its books at historical prices. Ampal holds 50% of Coral World which has underwater observation posts in Eilat and Maui Island in Hawaii.
- The partner in this company is Morris Kahan (Aurec's founder). The company was supposed to be issued several times in the past, but Mr. Kahan opposes the step, due to the unnecessary exposure as he sees it (in contrast to Amdocs in which he personally holds shares). The company holds 51% of Kfar Saba Country Club and 50% of Sportan, the Hod Hasharon sports club.
- Capital market: The company holds 20% of Epsilon, together with Israel General Bank, Shmuel Frenkel and Ron Levkowitz. The company also has investments in two venture capital funds, 15% of Renaissance and 50% of TriNet.
- Communications: Ampal holds a third of the MIRS chain shares. The agreement with Motorola was initiated by the new management, apparently inherited from the CEO, Shuki Gleitman. The MIRS deal between Ampal and Motorola Telecommunications Israel was concluded in January 1998. Ampal paid $110 million, a third coming from independent sources and another $75 million in "bridging" loans from Bank Leumi and Bank Hapoalim.
- In March 1998, the company transferred its MIRS holdings to a limited partnership. Ampal itself currently holds 24.86% of MIRS. The company's system is a digital and analog wireless communications system well suited to businesses, and as far as we know, is succeeding well beyond its founders' expectations.
- In accordance with the accounting procedures the company adopted, dividend payments will be recognized as income as soon as they are announced. Motorola is supposed to pay dividends to the partnership (in the case of a bad year, the dividend will be accrued). In 1998, Motorola will pay $4.95 million and in 1999, $10.7 million. From the year 2000, Motorola will pay an annual $23.4 million to the partnership, where it will be divided proportionate to the holdings.
- Motorola has a serious incentive in having a public offering in MIRS. It is agreed that if a public offering takes place, the partnership must pay a sizeable bonus to Motorola, based on a formula related to the company's increased value.
- High-tech: Ampal has holdings in various high-tech companies. Most of the investments have taken place since Gleitman became CEO. The company has invested in more than 20 high-tech companies in various fields. These companies are likely to be issued in the future, and analysts must monitor them closely.
Published by Israel's Business Arena July 20, 1998