Azrieli woos investors ahead of IPO

“The reason we are doing the IPO is our proven business success," group says in statement.

azrieli center 88 298 (photo credit: Courtesy)
azrieli center 88 298
(photo credit: Courtesy)
The Azrieli Group, controlled by Canadian business mogul David Azrieli, is holding last-minute meetings with representatives of institutional investors to highlight the company’s initial public offering planned for the end of the month.
“The reason we are doing the IPO is our proven business success and the intention to continue to realize our growth potential through the proceeds of the offering,” the Azrieli Group said in a statement.
In one of the largest IPOs in the history of the Tel Aviv Stock Exchange, the Azrieli Group will offer 25 percent of the company to the public in an effort to raise NIS 2.7 billion and expand its commercial real-estate activities. The offering is based on a company valuation of NIS 10.8b.
Following the IPO, Azrieli Group shares will be listed on the Tel Aviv-25 Index, making it the ninth-largest firm on the blue-chip index. The Azrieli family will retain control of 75% of the company.
The Azrieli Group is one of the largest private companies in Israel. It owns 11 shopping malls, including Azrieli in Tel Aviv, Malha in Jerusalem, Ayalon in Ramat Gan, and others in Holon, Givatayim, Hod Hasharon and elsewhere. An average of 160,000 people a day visit Azrieli Group’s 11 malls, which house a total of 1,500 stores.
Multi Azrieli, the group’s customer members club, currently has 50,000 members. The group also has holdings in some public companies, including Granite Hacarmel Investments Ltd., the parent company of Sonol Israel Ltd., and paint manufacturer Tambour Ltd.
Part of the purpose of the IPO is to expand the group’s commercial real-estate activities in the North and to establish shopping centers in Kiryat Ata, Acre, Rishon Lezion and Holon, at an investment of NIS 1.5b.
The Azrieli Group is for the first time publishing detailed financial information about its shopping-mall empire and investments in office buildings and residential towers. According to the IPO prospectus, the group had NIS 5.8b. in revenue in 2009. Sixty-eight percent of its revenue was generated from shopping malls and 28% from office space.
The group posted a net profit of NIS 1b. in 2009, an increase of 68% compared with 2008. Shopping malls accounted for about half of the profit.
In addition to building and operating shopping malls, the group rents out properties. Rental income generated NIS 783 million in 2009, up 23% from 2008 and 60% compared with 2005.
The financial statements published in the prospectus showed that the group had a cash flow NIS 1.4b. in 2009, most of which came from its shopping malls, commercial centers and office space.
During the global economic crisis, the group made several investments, including last year’s purchase of a 4.83% stake in Bank Leumi for NIS 740m., a 20% stake in Leumi card for NIS 360m. and the purchase of the Azrieli shopping mall in Givatayim.
Underwriters and law firms managing the IPO include Clal Finance Underwriters Ltd., Leumi Partners Ltd. and Poalim IBI Underwriting and Investments Ltd.