The consortium buying Haifa Port has closed financing for the deal. The Adani-Gadot consortium won the auction for the port last July, agreeing to pay NIS 4.1 billion, a price that many found astonishing. Today, it was announced that the consortium had closed financing with a consortium of lenders led by Mizrahi Tefahot Bank.
The lending consortium includes Meitav Investment House and State Bank of India. The agreement is for a loan of NIS 1.7 billion for up to two years.
In order not to incur high interest payments over the 32-year franchise, the Adani-Gadot consortium chose to take a short-term loan. Gadot Group and Adani Group will finance the rest of the deal from their own resources.
The Adani-Gadot consortium bid NIS 3.9 billion for Haifa Port, which makes the price NIS 4.1 billion, since a condition of the auction was that NIS 200 million would be added to the highest bid in order that there should be a clear winner. In any case, however, according to estimates, the Adani-Gadot bid was more than NIS 1 billion higher than the next highest bid, NIS 2.65 billion, by the Rami Ungar and Generation Capital consortium.
The Aadani-Gadot group plans massive real estate projects on the Haifa Port precincts, with commercial and residential developments, under existing Urban Building Plans. 70% of the consortium belongs to Adani Ports and Special Economic Zone Limited (APSEZ), the largest commercial ports operator in India, with a market cap of $23.4 billion. The other 30% belongs to Gadot Group, controlled by Tene Investment Funds (58%), with the remaining 42% held by Value LBH , part of the Value Base investment house.
Adani Group chairperson and founder Guatam Adani, who celebrated his sixtieth birthday last summer, is reckoned to be the third richest person in the world, after Elon Musk and Jeff Bezos.
A source familiar with the Haifa Port deal said that he understood its logic, and why the Adani-Gadot group was prepared to pay so much. He added, however, "But what concerns me is that this is still a highly leveraged deal, and at present we don’t need non-marketable deals of this size. In addition, its business model is to be an income-producing real estate company within the port, to make it a commercial center, which could be wonderful, like the Tel Aviv Port, which is amazing and flourishing, and this could be too. But when a company goes into the ports business, which is an operational and infrastructure business, and builds its business model on the basis of income-producing real estate, that looks strange to me, and I wouldn’t want to rely on that."
APSEZ CEO Karan Aadani said, "I’m delighted that our investment in Haifa Port is progressing as planned and that we have managed to achieve this important milestone. I’m sure that this is only the beginning of a much deeper relationship that will develop between Adani Group and Israel and its investments in the region."
Gadot Group CEO Opher Linchevski said, "We thank Mizrahi Bank and Meitav Investment House and the other members of the financing consortium, who believe in our vision for the development of the Port of Haifa. The proposals that were made to us indicate that even at this time Adani and Gadot enjoy exceptional financial capability in terms of the Israeli market and a high level of confidence on the part of financial entities in Israel and globally.
"This financial capability and the group’s strength will enable us to fulfil the vision for the development of the Port of Haifa and for turning it into the leading national port in the State of Israel, a port that will be the preferred gateway, among other things for cargoes coming from the Far East and destined for the West.
"The Gadot Group could not have chosen a better partner than the Adani Group, which has the professional know-how and holdings around the world in seaports, airports, and green energy projects. Adani’s extensive businesses, the value of which has shot up in the past few years to over $200 billion, and its financial strength, will enable us, together with the know-how accumulated at Gadot Group, to maximize the port’s assets."
Published by Globes, Israel business news - en.globes.co.il - on November 13, 2022.
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