"No longer on paper": Investor call reveals plans for Egged IPO

Keystone, managed by Navot Bar, published its financial results for the second quarter of the year, after which Bar elaborated on future plans in an investor call. Keystone raised its 2030 equity target by 50% from 4 to 6 billion shekels, while the weighted return on equity for the last 12 months jumped to 31.2%, and equity grew by 34% to approximately 3.1 billion shekels.

In the investor call, the CEO spoke about building next-generation assets, including the IPM data center campus in the communications sector (alongside the acquisition of 40% of Hot Mobile), the expansion of energy operations, the growth of Egged in Israel and Europe, and the expansion of Sunflower. The company presented strong cash revenues, distributed dividends totaling 71 million shekels since the beginning of the year, and expects an average annual cash flow of about 315 million shekels from income-generating assets in 2026-2031.

Egged IPO

In response to an investor question about whether 2027 is a realistic window for an IPO, Bar clarified that the move is progressing at a much faster pace and is already in practical work:

"What needs to happen is for time to pass. The value-enhancement moves at Egged have only just begun, there is still much value that needs to surface in it, we will of course also share this event with the public. We are in high gear working on bringing this company to the stock exchange."

"It is definitely reasonable to estimate that it will happen in the coming year," Bar said. "Don't hold me to my word if it happens in a year or a year and a quarter, but it is definitely already in the timeframe of work. It is no longer on the drawing board, it is already in the works."

He added in concluding his answer regarding the timing of the IPO: "So yes, the answer is in one word 'yes', in many words, it will happen soon."

In reviewing the multi-year goals until 2030, Navot referred to the IPO as a central engine for value creation. "The Egged IPO will reach maturity long before 2030. It will surface great value when the public is exposed to the actions happening inside Egged, even if it is exposed now, but it will see their implications," Bar said.

In the call, Navot explained the complexity of bringing a company of Egged's size to the stock exchange:

"This is a company that is a very large ship, bringing it to an IPO is a very heavy, very large move. It needs to be organized, it needs to be brought in the most efficient way, so that the capital market understands best what is in it."

He added that "we are organizing the company also so that it will be easy for capital market players to understand what is happening in the company, and not just some jumble of a transport company that perhaps does a few other things."

According to estimates, the requested valuation at the IPO will stand at about 8 billion shekels. Keystone has shown consistent value enhancement since acquiring control of Egged in 2022 at a valuation of about 4.8 billion shekels.

Since the acquisition, the transport company has distributed dividends of more than a billion shekels, and in a deal from last March, in which the Meitav investment house entered as a shareholder, it was already valued at about 6 billion shekels.