Israeli Infrastructure Fund CEO Confident in Major Energy Deal Amidst Regulatory Scrutiny

Erez Balsha, founder and CEO of the infrastructure fund Genenration Capital, expressed strong confidence that the company's nearly 4.5 billion shekel acquisition of Shikun & Binui Energy will be approved by regulators. The deal, which has faced competition from rival fund Keystone, has raised concerns about market concentration in Israel's energy sector. Balsha stated that negotiations with the Competition Authority and the Electricity Authority are ongoing and he is certain a "correct arrangement" will be found that benefits both the company and competition.

Genenration Capital views the acquisition as a significant step that will allow it to integrate Shikun & Binui Energy's substantial electricity production with its own customer base, thereby increasing the combined value of both entities. Balsha, who has two decades of experience in the infrastructure market, previously held senior roles at Azrieli Group, GES, Granit HaCarmel, CityPass, and TASC. He co-founded Genenration Capital a decade ago, aiming to channel pension and savings funds into national infrastructure projects.

The deal requires approval from the Competition Authority and the Electricity Authority, which are concerned about the concentration of power generation. They have previously blocked expansions due to minority stakes held by major private electricity producers. Regulators are expected to require Genenration to divest some of its generation assets as a condition for approving the acquisition.

Balsha also addressed concerns about Israel's energy security, warning that the threat of blackouts has not passed. He noted that while new power plants have been promoted, none have begun construction, and global supply chain issues for turbines could delay projects. He believes that only with the completion of planned stations, expected around 2031-2032, can Israel achieve energy security. He also commented on the water crisis, calling it a "traumatic experience" and expressing concern about over-reliance on groundwater reserves, advocating for increased desalination capacity. Regarding transportation, Balsha predicted worsening traffic congestion despite ongoing metro projects, emphasizing the need for aggressive investment in public transport.

Furthermore, Balsha discussed the nascent but important field of server farms, suggesting that while new regulations for their establishment are professional, their sudden implementation could harm international investor confidence. He believes Israel has the potential to become a leader in server farm development, similar to its role in R&D labs, provided the transmission grid is developed and server farms are co-located with power stations.