Shapir Sells Gas Distribution Assets for NIS 230 Million to Fund Infrastructure Growth
Translated & summarized from Bizportal by baba
Shapir Engineering is selling its natural gas distribution companies to Elad Group for NIS 230 million to fund its expansion into major infrastructure projects. The sale, part of a capital recycling strategy, is intended to prepare Shapir for significant state-backed infrastructure demands. CFO Moshe Savoski stated the decision to sell was strategic and not solely driven by regulatory hurdles related to Shapir's interest in the Ashdod Oil Refinery, though it provided additional impetus. The company is gearing up for large-scale projects like Highway 6 North and Waste to Energy facilities.
The story in 5 lines · by baba
- Shapir Engineering sold its natural gas distribution companies for NIS 230 million to the Elad Group.
- The sale is part of Shapir's strategy to free up capital for major infrastructure projects.
- Shapir's CFO stated the sale was strategic and not solely due to regulatory issues with the Ashdod Oil Refinery.
- The company is preparing for a significant increase in infrastructure project demand.
- Shapir anticipates a pre-tax profit of NIS 50-100 million from the transaction.
Shapir Engineering, controlled by the Shapira family, has signed an agreement to sell its entire holdings in natural gas distribution companies Super NG and Super NG Hadera and HaEmek to the Elad Group for NIS 230 million. The company anticipates a pre-tax profit of NIS 50-100 million from the transaction, which also includes mechanisms for additional future payments. This sale is part of Shapir's broader strategy to recycle capital and prepare for new investments, including significant infrastructure projects. The company recently brought in investors for its rights in major road projects like Highway 6 North and Highway 16, raising approximately NIS 950 million for a 70% stake. These moves free up capital invested in long-term infrastructure assets.
Moshe Savoski, Shapir's CFO, explained that the decision to explore selling the gas distribution operations predated any regulatory issues concerning Shapir's interest in the Ashdod Oil Refinery (Bazei Zikuk Ashdod). While the refinery acquisition was a motivating factor, it was not the primary driver for the sale. Shapir is preparing for a surge in infrastructure projects, including the Waste to Energy project and the extension of Highway 6 North, which require substantial capital investment. The company acknowledges strong international competition but believes its local expertise provides an advantage.
Savoski emphasized that Shapir's core business remains infrastructure, whether through direct construction or asset management. The company is positioning itself to absorb a significant portion of the anticipated demand for infrastructure work driven by state projects. Regarding the sale of the gas distribution companies, Savoski clarified that the wide profit range reflects the uncertainty of future contingent payments. He also noted that while Shapir is bringing in cash, there is no specific allocation for it yet, though they remain open to various investment opportunities.
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