The Tel Aviv Stock Exchange (TASE) IPO market is heating up, with quite a few financing rounds on the agenda. Some, however, prefer to look overseas for their IPOs, among them real estate and hotel tycoon Alfred Akirov, the controlling shareholder and chairman of Alrov Group. The company announced its decision today "to move towards an IPO on the SIX Swiss Exchange" by its Swiss subsidiary. Part of this will consist of "the usual processes of a preliminary presentation to possible investors and other prevailing procedings in local practices." Alrov's share price spurted 5% today, and has now gained 120% in three years, boosting its market cap to NIS 3.8 billion. Akirov himself holds shares worth NIS 2.8 billion, and his daughter, Sharon, holds 5% of the company's capital, with a NIS 200 million value.
The Swiss subsidiary in question is Epic Suisse, whose main activity consists of commercial centers, offices, and distribution centers. Alrov owns 78% of Epic Suisse's shares, with the remainder being held by the partner that manages Alrov's overseas income-producing activity. Alrov emphasizes, "Continued progress in consideration of and carrying out such an IPO or is subject to assessments, checks, required decisions, third party approvals (including from the authorities), market conditions, and decisions by the subsidiary and the company. It is not certain that the IPO will go through."
Most of Alrov's overseas real estate investment activity is currently concentrated in Switzerland, mainly in commercial centers, offices, and distribution centers. Alrov says that most of Epic Suisse's activity features "a high level of leverage and non-recourse loan terms." Alrov also has real estate investment activity in Israel, and is active in the hotel sector in Israel and in Europe - in Amsterdam, London, and Paris."
According to the figures reported by Alrov in its most recent annual financial statements, the activity in Switzerland includes 76,000 square meters of office space (the company's shares of this is 59,000 square meters) worth 471 million Swiss francs, 106,000 square meters of commercial space (the company's share of this is 83,000 square meter) worth 549 million Swiss francs, and 65,000 square meters of distribution and industrial space (the company's share is 51,000 square meters) worth 108 million Swiss francs. The company also has 4,000 parking spaces. The occupancy rates in 2018 were over 90% in all of these categories.
Epic Suisse has assets worth NIS 4.3 billion
Alrov's rent revenue in Switzerland totaled NIS 133 million in January-September 2019 (from a total of NIS 180 million in rent from its overseas income-producing properties). The company expects its rental revenue in Switzerland to reach NIS 186 million in 2019 as a whole (out of NIS 260 million from activity in overseas income-producing properties).
Alrov's activity in Switzerland generated NIS 367 million in revenue in 2018, and its profit totaled NIS 185 million. The value of Alrov's properties in Switzerland rose strongly during the year, and it also benefited from positive changes in the Swiss franc's exchange rate. The value of Alrov's properties also increased by NIS 83 million in the first nine months of 2019, "mainly due to revaluation of income-producing properties in Switzerland, the signing of new leases, and extensions of existing leases."
Published by Globes, Israel business news - en.globes.co.il - on January 15, 2020
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