Delek unit Ithaca set for London IPO next week

Delek Group Ltd. (TASE:DLEKG) UK North Sea oil and gas production unit Ithaca Energy is set for its flotation on the London Stock Exchange next week. The company plans closing its tender to sell on Tuesday and begin trading on Wednesday.

The IPO will give Ithaca a valuation of between $2.9 billion and $3.6 billion, both before and after money, because the company is hardly offering any new shares, with Delek selling 10%-15% of its stake in Ithaca. “Reuters” reports that this will be the biggest IPO on the London Stock Exchange this year. The valuation is higher than the $2.3 billion recorded in Delek’s books but lower than the expected valuation. The very limited amount of money raised from new shares will be used to repay owners debt and the expenses of the flotation.

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If the IPO is completed within the planned range, then the Ithaca flotation will inject $340-$540 million cash into Delek and further help reduce the company’s financial debt, which had fallen to NIS 3.8 billion as of June 2022.

This will be another milestone in a remarkable recovery for Delek, controlled by Yitzhak Tshuva (50.2%), which currently has a market cap of NIS 9.8 billion. In the dark days at the start of the Covid crisis in March-April 2020, the company was on the brink of collapse. At the end of 2019, Delek had a debt of NIS 6.1 billion but as energy prices collapsed along with Delek’s share price, the company was forced to reduce its debt to NIS 4.3 billion by the end of 2020 by selling off assets. The subsequent rise in energy prices and resulting dividend payments have allowed Delek to continue reducing its debt.

Delek has been eyeing a London flotation for many years of its gas and oil exploration and production activities in the Eastern Mediterranean, which are carried out by NewMed Energy (TASE: NWMD) (formerly Delek Drilling). NewMed Energy holds a 45.3% stake in the Leviathan gas field offshore from Israel and a 30% stake in the Aphrodite gas field offshore from Cyprus.

In the first stage Delek will make do with the flotation of Ithaca, most of whose assets are northeast of the Scottish coast in the North Sea and were acquired from Chevron three years ago.

Ithaca chairman Gilad Myerson said that the company’s IPO had earned major interest from a wide range of investors in Europe, the US, Asia, the Middle East and Israel and demonstrates that, “Local and foreign investors believe in Ithaca’s story and management and the future of the industry.”

Published by Globes, Israel business news – en.globes.co.il – on November 3, 2022.

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