Business in Brief: October 26

Gov’t to sell 5% Discount stake; Delek targets London Stock Exchange; Modu aims for TASE IPO

Gov’t to sell 5% Discount stake • By KOBY YESHAYAHOU
After the Tel Aviv Stock Exchange closed Monday evening, the Finance Ministry began selling a further stake of at least 5 percent in the government’s holding in Israel Discount Bank. It approached nine foreign investment banks that will be given an option to purchase the holding.
The winning bid will be chosen Tuesday morning at about 9 a.m.
As part of the privatization process, the accountant-general will commit not to sell any more of the government’s holdings in the bank over the next three months. After this sale the government will no longer have a core holding in Israel Discount Bank because its stake, currently at 11.66%, will fall below the 10% threshold determined by the Bank of Israel.
The government was encouraged by the success of its previous sale of Israel Discount Bank shares at the end of July, when UBS bought an 8.33% tranche for NIS 553 million.
Delek targets London Stock Exchange • By ADI BEN-ISRAEL
Delek Group Ltd., controlled by Yitzhak Tshuva, is planning a public offering on the London Stock Exchange in January.
The company’s holdings include stakes in the Tamar and Leviathan natural-gas discoveries.
Delek Group will try to raise $300 million through an offering of 10 percent of its shares, reflecting a company value of $3 billion, or NIS 10.8b. Delek Group’s market cap is NIS 11.48b., so the offering will be held at a discount of about 5%.
Delek held the kickoff meeting last week, with Tshuva, Delek Group president and CEO Asaf Bartfeld, CFO Barak Mashraki and the underwriters, UBS, Citi and Deutsche Bank.
Delek Group hopes that a London listing will increase its exposure to large European investors. The timing is good for the company, given the markets’ rally since September, as worries about the debt crisis in Europe abate, and given developments in the company’s exploration ventures. Production from Tamar is scheduled to begin in early 2012, and exploratory drilling has begun at Leviathan.
Modu aims for TASE IPO • By HILLEL KOREN
Modu Ltd., run by CEO Dov Moran, on Monday published its prospectus for an IPO on the Tel Aviv Stock Exchange. The prospectus states that modu has a going concern warning from its auditor and that it has spent $115.6 million to date.
Modu will issue shares, bonds, and warrants.
Modu posted a loss of $8.1m. in the first half of 2010 and had a negative cash flow of $5.6m., after losing $45.7m. in 2009 as a whole and a negative cash flow of $44.2m. It posted $1.6m. revenue in the first half of 2010, after earning $87,000 in 2009 as a whole. The company also disclosed that its capital equity deficit is $1.5m.
Modu is developing a modular mobile telephone, the lightest on the market, that users can personalize and customize.
Moran launched the venture in 2008 after selling msystems, which he also founded, to SanDisk Corporation.