Infrastructure company Tahal Group International BV, a Kardan NV (TASE: KRNV;AEX:KARD) subsidiary, today reported a deal estimated at $370 million (NIS 1.4 billion), the largest in its history. In the deal with Angolan government company Gesterra, Tahal will manage and operate for seven years the agricultural development project it built in the Kiminha region.
The project is slated to produce 60,000 tons of agricultural produce annually, designated for sale on the local market, with proceeds amounting to $52 million a year - a total of $370 million. Tahal signed the agreement with ZRB, a local government-owned company. The two companies have an option to extend the agreement with the government for five more years. Tahal and its partner plan to begin implementation of the agreement immediately, and Tahal predicts that it will recognize initial revenue from it in the fourth quarter of this year.
Under the agreement, Tahal and ZRB will be responsible "for supplying the equipment needed to operate the project, employing the management and professional team necessary for the purpose, and paying franchise fees to the local Angolan agency holding the rights to the project on behalf of the Angolan government."
The share price of Tahal parent company Kardan responded to the news with a sharp rise, partly offsetting a 30% drop since the beginning of the year that brought the company's market cap to its current value of NIS 70 million.
Built on the model of an Israeli moshav
The project, established in recent years by Tahal under a separate contract with the Angolan government, is located 70 kilometers east of Luanda, Angola's capital. Work on the project, which began in 2012 after $200 million in financing for the deal was closed, was recently completed. Tahal said that the project "reproduces the model of the Israeli moshav (cooperative settlement), built from scratch on a 50-dunam (12.5-acre) site. The project includes 300 homes and private farms of 10 dunam (2.5 acres) each, thousands of dunams of field crops, a logistics and agricultural center with sorting and packing facilities, chicken houses for supplying over 24 million eggs a year, and related infrastructure."
Tahal president and CEO Saar Bracha said, "This is the biggest project in Tahal's history, and a very important milestone in the group's development. Winning management of the project, which Tahal constructed, reflects the Angolan government's confidence in the company and in ZRB, its partner, and Tahal's wide-ranging capabilities in carrying out and managing projects, and the experience it has accumulated in the core sectors in which it operates: water and sewage, agricultural development, natural gas, and the environment." Bracha added, "The expected revenue from the project is on top of over $300 million in existing orders, and ensures Tahal's continued growth in the coming years in the markets it has targeted."
Under Bracha's management, Tahal has undergone a strategic and structural change in recent years. It now operates in four core sectors: water and sewage, agricultural development, natural gas, and the environment. Tahal's profit in the first half of 2016 totaled less than €2 million, compared with €19 million in the first half of 2015 resulting from the sale of its most of its holdings in KWIG, a company engaging in water purification in China.
Published by Globes [online], Israel business news - www.globes-online.com - on October 13, 2016
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