Harel Wiesel and Gad Proper are partners: The surprising beneficiaries of the Dan real estate merger
After selling Dan's transport operations at a profit of over 1 billion shekels, the Value-LBH fund is on its way to creating further value by merging Dan's real estate operations with Donitz. Not only will the fund benefit from the deal, which will yield a 5x return on its money, but so will a series of capital owners such as Harel Wiesel, David Fattal, and Gad Proper.
After preparing for an initial public offering (IPO), the real estate operations of the transport company Dan are expected to enter the Tel Aviv Stock Exchange through a merger with the public real estate company Donitz. Completing this move will constitute significant additional value creation for the controlling shareholder, the Value-LBH fund, which retained its holding in the real estate operations after selling the transport business earlier this year.
In recent months, the fund, under the joint control of the investment house Value Base and the infrastructure fund LBH, managed by Shimon Ben Hamo, Ofer Linchevski, and Yair Efrati, has been preparing a prospectus for the issuance of shares of "Dan Equity Real Estate." During this process, the fund received inquiries from institutional bodies and real estate companies to purchase the activity. Ultimately, the company chose the offer from Donitz, managed by Ronen Yafo and traded at a value of 2.1 billion shekels. The fund preferred the Donitz offer because it is currently traded without a controlling core after the real estate investment fund JTLV sold its holdings earlier this year.
After the merger, Value-LBH, which currently holds about half of Dan Real Estate, will hold shares constituting about 16% of Donitz's capital. Simultaneously, about 1,200 Dan drivers, who hold the second half of Dan Real Estate, will receive shares constituting 17% of the merged company (a total of 33% of Donitz shares will be allocated to Dan Real Estate owners). Additionally, four directors chosen by Dan will be appointed to the Donitz board of 9 members.
The Tel Aviv project and 30 million in options
Alongside the share allocation, current Dan Real Estate shareholders will receive additional options worth about 30 million shekels. These will vest when the city building plan (TABA) takes effect for the project in Shikun Dan, Tel Aviv, which includes 13 luxury buildings and 750 housing units. Shareholders will also be entitled to cash consideration of 30 to 50 million shekels from receipts expected within two years of the deal's completion, potentially bringing total shareholder proceeds to 80 million shekels.
Dan Real Estate operates in residential construction, including the Holyland complex in Jerusalem, the "HaAmal" project in Bat Yam, the ERA project in Hadera, and the "7 Days" project in the Sde Dov complex. The company also holds income-producing assets such as Shikun Dan, the Timna complex in Holon, Tower C in the LYFE complex in Bnei Brak, the "Avis parking lot" in Ramat Gan, and holdings in Beit Sha'av and Beit Hadar Dafna in Tel Aviv.
Donitz holds about 55 projects and lands expected to include 27,000 housing units, mostly in urban renewal. Of these, 3,000 units have building permits and 8,500 have approved city plans. The projects also include 35,000 square meters of commercial and office space.
The parties believe the move will create high synergy, combining Donitz's urban renewal experience with Dan's significant land bank. However, success depends on a recovery in the residential real estate market, which is currently suffering from stagnation and price decreases.
If completed, this merger will represent further value creation for Value-LBH. Earlier this year, Value-LBH sold 50% of Dan's public transport business for 1.4 billion shekels to Clal Insurance, Leumi Partners, and Mizrahi Tefahot Invest. That deal, reflecting a 2.8 billion shekel valuation, occurred six years after the fund purchased control for 500 million shekels at a 1 billion shekel valuation.
Financial bodies including Hachshara Insurance, Shlomo Insurance, and Discount Capital, as well as private investors like David Fattal, Chen Lamdan, Harel Wiesel, Gad Proper, and Nathan Hetz, joined the fund that purchased Dan. Since 2020, Value-LBH has withdrawn significant dividends covering the acquisition cost, and with this sale, the fund may achieve a total profit exceeding 2 billion shekels—nearly 5 times its initial investment in just six years.
Unmatured value creation
Even after these deals, Value-LBH will continue to hold the Dan Capital activity, owner of Israel's largest desalination facility, Sorek 1. The fund does not plan to exit this activity soon and continues to develop it. Dan Capital is currently participating in tenders for the expansion of the Ashkelon desalination facility and the construction of a new major facility in Emek Hefer.
