Mega-deal in the energy market leads to a wave of power plant ownership changes
Generation Capital has signed an agreement to acquire the energy arm of Shikun & Binui for 4.45 billion shekels. To secure regulatory approval, the parties have outlined a contingency plan involving asset swaps in power plants, including the Sharon region project, with the participation of Nofar Energy.
A dramatic day in the energy market, with mega-deals expected to reshape the landscape of asset holdings. In the central transaction announced on Wednesday, the infrastructure fund Generation Capital is acquiring full ownership of Shikun & Binui Energy for 4.45 billion shekels.
This deal, which includes stakes in several power plants and renewable energy production facilities, is set to make PowerGen (a subsidiary of Generation Capital) one of Israel's most prominent electricity producers. The Electricity Authority is expected to require PowerGen to make several adjustments to its holdings as a condition for approving the deal.
Asset Reorganization
As part of an agreement with Rapac Energy, the parties will swap shares in jointly owned power plants to "separate forces." This will bring Generation to a 52.5% stake in the Reindeer power plant, currently under development in the Sharon region (up from 27.5%), while transferring its 16.7% share in the Alon Tavor power plant to Rapac.
Simultaneously, Nofar Energy, owned by Ofer Yanai, announced it would purchase the remaining 47.5% stake in the Reindeer power plant from the Phoenix insurance company and other investors for 855 million shekels.
Should the Electricity Authority reject the swap deal, Generation plans to sell its Reindeer shares to Nofar, granting Nofar 100% ownership. Under this contingency, ownership of the Reindeer plant would alternate between the parties every five years.
Financial Commitments and Regulatory Hurdles
If the deal is blocked by regulators, Generation will pay Shikun & Binui Energy a penalty of 300–350 million shekels. Conversely, Shikun & Binui Energy has committed to pay 300 million shekels to Generation if it accepts a competing offer, such as one from the Keystone infrastructure fund. If the deal's completion is delayed beyond 8.5 months, Generation will pay 10% annual interest on the transaction amount.
For Shikun & Binui, the sale will yield approximately 3 billion shekels in cash, enabling the company to eliminate its solo debt and reduce consolidated debt by about 5.5 billion shekels. CEO Amit Birman stated that the deal would significantly strengthen the group's financial resilience.
Strategic Rationale
For Generation Capital, the primary attraction lies in the renewable energy project backlog. This aligns perfectly with the company's stake in BezeqGen, Israel's largest private domestic electricity supplier, allowing for significant growth at a time when the market faces a shortage of affordable electricity.
