Delek Said to Start Roadshow for $1.1 Billion Gas IPO Next Week

  • Delek plans to list 9.25% stake in gas field on Israeli bourse
  • HSBC and JP Morgan working on roadshow in London and U.S.

Delek Group Ltd. will start a roadshow next week to sell a stake in a $12.3 billion natural gas field off Israel’s shores, according to a person familiar with the matter.

Israel’s biggest energy company, controlled by billionaire Yitzhack Teshuva, will meet with investors in Tel Aviv, London and the U.S. for the planned initial public offering of Tamar Petroleum, a special purpose vehicle that owns 9.25 percent of the Tamar gas reservoir, the person said, asking not to be identified because the information isn’t public.

Delek has about 50 meetings scheduled in Israel, and is working with HSBC Holdings Plc and JPMorgan Chase & Co. on the London and the U.S. leg of the roadshow, the person said. Both HSBC and JPMorgan declined to comment.

Delek plans to list Tamar on the Tel Aviv Stock Exchange at a valuation of about $1.1 billion and complete the IPO by the end of July, the person said. Delek also plans to sell about $650 million in bonds by the first week of July, the person said.

Marketable Asset

“After having examined several alternatives, and in view of the interest of foreign and Israeli investors, we decided to establish a corporation which will allow investors optimal direct exposure to the Tamar reservoir in a marketable, liquid and conservative asset,” Delek Drilling LP Chief Executive Officer Yossi Abu said on Thursday. Delek Drilling owns a 31.25 percent stake in the Tamar reservoir and is controlled by the Delek Group.

Israel’s government forced Delek and Noble to sell their holdings in Tamar as part of a regulatory framework that aims to promote competition and the development of the country’s largest natural gas field, Leviathan. Delek has to sell its entire stake, while Noble has to sell a 7.5 percent holding in the reservoir.

Delek Drilling shares rose as much as 1.3 percent Thursday before paring gains, and were up 0.4 percent at 13.33 shekels at 3:12 p.m. in Tel Aviv.

Tamar, Israel’s second-largest field, has supplied the vast majority of the country’s natural gas since 2013. Israeli demand for gas will double by 2025, according to a report Wednesday from BDO Consulting Group. While the Tamar partners have had the Israeli market to themselves until now, Greece’s Energean Oil & Gas SA -- which operates two other Israeli gas fields -- has signed contracts with local power producers and aims to start pumping gas by 2020.

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