Doral to invest 2.2 billion shekels and gain control of its American subsidiary
Doral Energy is investing $738 million (approximately 2.2 billion shekels) into its US subsidiary, Doral LLC. This strategic move increases the parent company's stake from 26% to 53.2%.
Doral Energy has embarked on an ambitious move. The Israeli public renewable energy company will invest a total of $738 million, approximately 2.2 billion shekels at the current exchange rate, into its American subsidiary Doral LLC. In return, it will increase its holding to 53.2% compared to the 26% it holds today.
According to Doral Energy CEO Yoni Hantzis, "This is a strategic deal for Doral that allows it stronger access to its main growth engine, which is the activity of Doral LLC in the US, and at the same time generates sufficient liquidity for it to advance its projects."
Deal Structure
The move consists of three sub-moves:
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A capital injection of $400 million from Doral into the subsidiary, entitling Doral to 9.7% of Doral LLC's shares. The parent company prepared for this by raising 920 million shekels from institutional entities in June.
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The purchase of 5.8% of shares from Nick Cohen, CEO of Doral LLC, through his company CAG. This is in exchange for an allocation of Doral shares worth $206 million, alongside a cash payment of $15 million now and another $20 million in 2028.
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The completion of a previous deal from November, in which Doral invests $132 million in exchange for 11.8% of Doral LLC's shares.
In total, Doral is increasing its holding by 27.2%. The new ownership structure of Doral LLC will be: Doral (53.2%), Migdal insurance company (11.4%), and the Dutch investment fund APG (35.4%).
Market Outlook
Gilad Ben-Zvi, an energy analyst at Leader Capital Markets, calls this a "positive move for the company. It increases market confidence in Doral and will allow it to meet with a larger cash flow in areas where it is already investing, which will later lead to value creation."
During an investor call, Hantzis noted that the American subsidiary has a project pipeline of 7.9 gigawatts and a storage capacity of 2.5 gigawatt-hours, most of which have secured "Safe Harbor" tax benefits. The capital injection aims to connect most of these projects to the grid by 2029, with full completion by 2030. This is expected to add 620 million shekels annually to Doral's share in Doral LLC's EBITDA.
Regarding the previously discussed IPO, analysts suggest that the current move postpones the need for a public offering. By simplifying the ownership structure and reducing existing debt, the company has reduced the immediate necessity for an IPO. However, senior institutional officials note that the removal of previous shareholder protections could potentially facilitate a future IPO, meaning it cannot be ruled out at a later stage.
