Ari Real Estate Raises NIS 254 Million from Institutions to Acquire Stake in G City

Ari Real Estate, controlled by Tzachi Abu with a 51.3% stake, is raising NIS 254 million from institutional investors to finance its acquisition of a 26% stake in the commercial real estate company G City. Earlier this month, Ari Real Estate signed a deal to purchase these shares for NIS 661 million. The capital raise involves issuing shares and options to investors including Migdal, Meitav, and Yelin Lapidot. Shares will be allocated at NIS 0.0449 each, reflecting a 2% discount to the last trading day’s price, while options will have an exercise price of NIS 5.7, 24% above the current share price, exercisable over 18 months.

Additionally, Ari Real Estate plans a public capital raise soon, with Abu intending to invest NIS 200 million. This investment is a condition for completing the institutional share and option allocation, requiring at least NIS 200 million raised publicly. The capital raise is necessary to cover the costs of acquiring G City shares. Ari Real Estate must pay NIS 230 million to Norstar, G City’s controlling shareholder, upon deal completion and another NIS 431 million six months later.

Moreover, Ari Real Estate holds an option to buy an additional 7% of G City shares for NIS 208 million, which would make it the sole controlling shareholder, with Norstar obligated to sell under a matching option. Ari Real Estate also plans to invest NIS 280 million in G City’s upcoming capital raise to strengthen its capital structure and support debt repayment over the next three years, aligning with Abu’s strategy to reinforce the company’s financial position.