Nofar Energy Scraps Tel Aviv Preferred Shares Offering Amid Investor Hesitation
Nofar Energy canceled its preferred shares issuance on the Tel Aviv Stock Exchange after lukewarm institutional response, planning instead to explore a US offering.
Nofar Energy has withdrawn its plan to issue preferred shares on the Tel Aviv Stock Exchange following a lukewarm response from institutional investors and hedge funds, who expressed concerns over the unfamiliar financial instrument. This represents a setback for the company, which had been actively promoting the new mechanism over recent months. However, management is not abandoning the concept and plans to explore a similar offering in the USA after completing its dual listing.
Financial Structure and Terms of the Proposed Offering
Nofar Energy trades at a market capitalization of 6.5 billion shekels on the local exchange. Seeking to raise capital without increasing leverage—as typically occurs with bond issuances—the company attempted to launch tradeable preferred shares. According to the draft prospectus, the shares were slated to pay a cumulative preferred dividend of 8.5% annually, increasing to 10% after five years, 11.5% after ten years, and 13.5% after fifteen years.
The fixed par value of each preferred share was set at 100 shekels, structured as perpetual shares without a fixed redemption date, while granting Nofar the option to redeem them starting at the end of five years.
Investor Hesitation and Alternative Capital Raises
Conversations with institutional players revealed that investment managers would classify the preferred shares as equity investments, leading many to prefer purchasing the standard common stock directly to capture potential upside. Meanwhile, hedge funds worried that the Israeli preferred stock market remains insufficiently developed and that the exchange would not automatically generate dedicated indices or yield calculations for the product.
The withdrawal comes just days after Nofar completed another significant capital transaction. Meitav Provident and Pension Funds invested approximately 200 million shekels in Nofar Israel, the subsidiary consolidating the group's domestic operations, at a post-money valuation of roughly 2.3 billion shekels, acquiring an 18.7% stake. Following this deal, Nofar Energy retains a 69.8% ownership in Nofar Israel.
