Keystone and AdlTech Seek Immediate Loan-to-Equity Conversion in Sorek Power Plant
Keystone Fund has shifted its strategy and requested to advance the conversion of its loan to AdlTech into equity shares in the Sorek power plant immediately. The partners in the Sorek plant, AdlTech, Keystone, and Menora, have jointly approached the Israel Electric Corporation to expedite this conversion, which under their original agreement was only permitted after the plant begins commercial operations, scheduled for 2029. AdlTech supports the move, describing it as a positive step that would have occurred eventually.
In December 2024, AdlTech, led by Uri Adelsburg, and insurance company Menora won the tender to build the Sorek power plant. Keystone, involving Gil Deutsch, Roni Birem, and Navot Bar, provided financing estimated between 300 and 400 million shekels. According to the financing terms, after the plant becomes operational, the company may convert part of the loans into a 40% equity stake and 49% voting rights, subject to approvals from the Israel Electric Corporation and the Antitrust Authority. This is the conversion Keystone now seeks.
The Electric Corporation had previously allowed Keystone only to provide loans, not to immediately acquire shares, due to concerns that combined holdings with AdlTech might exceed the 20% production threshold in the private electricity market, which is prohibited. Keystone's existing stakes in the IPM plant (450 MW) and Etgal plant (200 MW) complicated approval. Energy market analysts interpret the request as Keystone stepping back from acquiring Shikun & Binui Energy, which recently agreed to sell to Generation Infrastructure Fund for 4.45 billion shekels, outbidding Keystone's 4.35 billion shekel offer.
If the Generation deal fails, Keystone might renew its bid, potentially increasing its holdings to over 630 MW. The private electricity market cap has expanded from 1,650 MW at the original deal to about 4,000 MW, potentially allowing Keystone's entry. However, the Antitrust Authority's approval remains uncertain, as it assesses market influence differently, focusing on the ability to affect prices through significant market share.
AdlTech and Keystone jointly hold stakes in two privatized plants, Hagit Mizrah and Ramat Hovav, alongside Shikun & Binui Energy. Keystone also owns the IPM plant in Be'er Tuvia, and AdlTech holds 18.75% of the Dorad power plant. The Sorek plant, to be built near Shafdan and the Sorek desalination facilities, will have a capacity of 630-900 MW. AdlTech will operate it for 25 years before transferring ownership to the state. The group offered a availability tariff of 3.18 agorot per kWh, providing stable income for financing security. AdlTech is currently the largest private electricity producer but risks losing this status to Generation if the latter secures regulatory approval for the Shikun & Binui Energy acquisition.
