Stark Power Eyes Over $30 Million EBITDA by 2028 with US Energy Deal

Stark Power, a company that has seen its stock surge approximately 425% since the beginning of the year to a market value of around 491 million shekels, is advancing a significant acquisition in the United States. The company is in advanced negotiations to purchase an operational 250-300 megawatt natural gas power plant and an adjacent 80 megawatt, four-hour energy storage project. This deal, which the market reacted positively to, is expected to generate between $43-47 million in annual revenue and $30-33 million in EBITDA once new tolling agreements are in place and both assets are fully operational. The total valuation for these assets is estimated at $218-233 million.

Michael Avidan, CEO of Stark Power, highlighted that the deal was secured through the company's management's long-standing connections in the U.S. energy market, rather than a formal sale process. He described the projects as highly attractive due to their significant cash flow and EBITDA generation, underpinned by 15-year capacity contracts for both the power plant and storage facilities, minimizing exposure to market price fluctuations. While the EBITDA to enterprise value ratio of approximately 14% is considered strong, potential risks include the ongoing operation of the power plant and the successful development of the storage facility.

Avidan clarified that the projected $30-33 million EBITDA is for a representative year of full operation, anticipated from 2028, following the implementation of new tolling agreements and the completion of the storage project. The storage facility is expected to commence commercial operations in 2028. Stark Power aims to finance a significant portion of the deal, estimated at $27.5 million in equity investments, through a $85 million credit facility from an Israeli bank, thereby minimizing the need for substantial personal capital and enhancing returns on equity.

The company's strategy involves two main pillars: generating stable, long-term cash flow from energy production and storage assets, and developing data center campuses in the U.S. through its subsidiary SAGE. Avidan stated that the energy deal aligns perfectly with this dual-pillar strategy, with potential future synergies explored, such as establishing a data center adjacent to the acquired power plant. By 2028, Stark Power expects to have a solid EBITDA and cash flow base from its energy assets, alongside continued growth in its data center development business.