The huge IPO by Oil Refineries Haifa will get underway tomorrow. In tomorrow’s institutional tender, investors will bid for stakes in the company at a minimum price of NIS 2.20 per share, reflecting a company value $1.04 billion. The company will offer packages comprising units of 1,000 shares at NIS 2,200. The government plans to sell 40-50% of Oil Refineries Haifa in the in the institutional tender part of the IPO.
Government Companies Authority director Eyal Gabbai is in charge of the privatization of Oil Refineries Haifa via the Tel Aviv Stock Exchange (TASE). The institutional tender will have a unique format to ensure that only classic financial institutions - insurance companies and mutual and provident funds - will participate. Portfolio managers, underwriters and venture capital funds will not be allowed to participate, in contrast to the usual practice in institutional tenders.
The special format is intended to prevent the participation of strategic investors from acquiring a stake in Oil Refineries Haifa under the guise of financial investors, and thereby pushing aside genuine investment institutions. The Government Companies Authority also wants to achieve as great a diversity as possible of financially strong Israeli and foreign shareholders for the goods. Each investor may buy a maximum of 4.99% of the company.
The next stage of the IPO will be the public tender, in which strategic investors may participate in order to gain control of Oil Refineries Haifa. The government will sell the rest of its stake in the company in the public tender, with a threshold of 40%, with the aim of totally divesting its holding in the company.
Under the terms of the IPO, the minimum price in the public tender will be based on the results of the institutional tender. The Government Companies Authority also set a mechanism for adjusting the prices between the two tenders in the event that the price set in the public tender is higher than the price set in the institutional tender. Under this scenario, investment institutions who bought shares in the private offer for sale will have to add 80% of the differential of the price set in the public tender, up to a maximum of 15% of their bid.
Published by Globes [online], Israel business news - www.globes.co.il - on February 11, 2007
© Copyright of Globes Publisher Itonut (1983) Ltd. 2007