Delek Group Ltd. (DLEKG), which has the second-best returns on the benchmark TA-25 Index this year, is planning to set up a new company to hold its energy exploration activities and that will probably be traded abroad.
The holding company said today that the move is intended to unlock value for shareholders and will increase foreign investment in Israel’s energy market. The new entity will hold the company’s stakes in energy exploration units which have rights in Israel’s largest natural gas fields. Delek Group’s shareholders will get one share of the new company for each share held.
Israel’s reclassification to developed market from emerging by MSCI Inc. in May 2010 led to an exit of foreign investors and sent volumes tumbling 44 percent through the end of 2012, according the Bank of Israel. Companies including Mellanox Technologies Ltd. have delisted from the exchange while others, including Israel Chemicals Ltd., have said they plan to dual trade shares in the U.S. to help reach global investors.
“The planned change will enable a larger and more-varied group of investors to access the company’s activities,” Asaf Bartfeld, Delek Group’s chief executive officer, said in a statement today. It will also allow foreigners to invest in the “big potential” of this sector, he said.
The stock advanced 2.7 percent to 1,314 shekels at 11:30 a.m. in Tel Aviv. Trading was less than 60 percent of the daily average for the past three months. The new company will trade on an overseas bourse, in Israel, or both, the company said. The plan will be implemented in 2014 subject to regulatory approvals.
The new entity will include the holdings in Delek Energy Systems Ltd. (DLEN), Delek Drilling-LP (DEDRL) and Avner Oil Exploration LLP (AVNRL), among others, the company said. Delek Group will continue to own all non-energy holdings, including IDE Technologies, Delek Europe Holdings Ltd., Delek Automotive Systems Ltd. and others.
Overseas investors injected $1.3 billion in Israeli shares this year through October, Bank of Israel data show. That’s 23 percent below the net $1.7 billion of shares they bought in 2009, before the MSCI upgrade.
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