Road service company Shagrir Group Vehicle Services Ltd. (TASE: SHGR) is beginning its Tel Aviv Stock Exchange (TASE) career on the wrong foot, after shares were distributed as a dividend in kind to shareholders of Pointer Telocation Systems Ltd. (Nasdaq:PNTR), previously the controlling shareholder in Shagrir.
The share plummeted 25% on its first day of trading, following a 50% plunge and the ensuing correction. Trading volume in the new share was not large, totaling NIS 3 million around noon. The largest shareholder in Shagrir is private company DBSI, owned by Yossi Ben-Shalom and Barak Dotan, which holds 29% of the share capital.
Shagrir did not become a public company by means of an IPO, so its share price was determined of a valuation by Variance Economic Consulting, which was added to the company prospectus, giving the company a NIS 67.5 million value. According to the number of shares listed for trading, a base share price of NIS 8.10 was set at the beginning of today's trading, but investors searching for the trend and perhaps probing where the bottom would be, also made deals at NIS 4.10 a share.
The decline was followed by a correction, with the share being traded around noon near NIS 6, reflecting a market cap of less than NIS 50 million for Shagrir. DSBI first invested in Shagrir in 2004, and acquired a controlling interest in it at a company value of NIS 200 million. At the same time, Shagrir's current business does not include vehicle location activity, which was transferred to Pointer. Other downward pressure on the share now is liable to come from US investors holding the shares of Pointer, which received Shagrir shares as a dividend in kind, and are likely to sell them.
Shagrir's road services include towing and repairs. The company also holds a controlling interest in Car2Go, a car sharing service on a daily or hourly basis for the general public. Shagrir's revenue totaled NIS 157 million in 2015, and the company posted a NIS 5.5 million net loss, compared with a NIS 2.5 million net loss on NIS 140 million in net revenue in 2014.
Published by Globes [online], Israel business news - www.globes-online.com - on June 29, 2016
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