Israel Infrastructure Fund has sold its holdings (36%) in Milgam, controlling owner of Pango, for NIS 100 million – and has recorded a profit that is twice its investment ■ In 2011, half of Pango was purchased by a cellular equipment company based on a value of NIS 15 million ■ This is Israel Infrastructure Fund’s eighth exit
By Assia Sasson
About a week ago, the institutional entities investing in Israel Infrastructure Fund received notification that another one of the Fund’s investments had been realized. IIF sold its holdings (36%) in Milgam to the Weil Family (which had substantial holdings in Osem and Enlight) for NIS 100 million. In other words, the representative price of Milgam is worth NIS 280 million.
IIF purchased holdings in Milgam in November 2012 for NIS 50 million from Milgam’s parent company, Kardan Municipal Services. Taking into consideration the dividends that IIF has received over the years, the Fund has doubled its return on investment. This is the eighth exit of the Fund owned by Harel Insurance (whose controlling owner is Yair Hamburger), Attorney Yehuda Raveh and the Fund’s CEO, Yaron Kestenbaum.
The Milgram Group was founded in 1983 as a company specializing in providing advanced comprehensive services to municipal institutions, water companies, government institutions, public and private companies. Milgam provides its customers with advanced services and solutions for managing projects, such as the operation and management of municipal billing systems, regular maintenance of water and sewage systems and planning and management of public parking areas.
In addition, the Company specializes in implementing national and municipal logistical projects for municipalities, government ministries and private companies. Milgam collects NIS 6 billion annually for its customers.
One of Milgam’s main holdings is Pango, which provides cellular parking payment services nationwide. Currently, Pango executes more than 3 million transactions per month at dozens of municipalities and local authorities, through its application.
In 2011, Unicell, which specializes in cellular solutions, purchased 50% of Pango, at a value of NIS 15 million. Milgam’s value based on this deal was NIS 45 million. In other words, Pango’s stake was a third of Milgam’s value. Estimates indicate that Pango maintained its relative weight in the company’s value; i.e. Pango is worth NIS 93 million. Based on Milgam’s reports, Pango has nearly 1.9 million users.
IIF specializes in investments in companies engaged in the fields of infrastructure, energy, transportation, services, logistics and communications. The Fund manages $1.8 billion through managed funds and joint investors, and it is supported by Israel’s leading financial institutions and investors from Europe and North America.
Established in 2007, IIF owns, inter alia, 3.5% of the rights to the Tamar Natural Gas Field (purchased in December 2016 for $404 million) and 50% of Swissport, which operates a cargo terminal at the Ben Gurion International Airport. The Fund also owns 75% of the shares at Hayovel Lines, which operates and maintains Highway 431 from Ayalon South to Modiin; and it also owns Via Maris, which operates a desalination plant in Palmahim – with an annual output of 100 million cubic meters.
IIF has had a number of exits in the past two years, including the sale of its direct holdings in Highway 6 to Clal Insurance for NIS 135 million in February of 2015 – recording a yield of 100% on its 4-year investment. The Fund sold its preferred shares in Dalia Energies, which built Israel’s largest private power station at the Tzafit site, for NIS 250 million. It was purchased by institutional entities led by Amitim Senior Pension Funds. In July 2016 2016, the Fund sold its holdings in Dalia Energies in regular shares (20%) to the Teachers’ Funds for NIS 430 million, thereby recording a profit of eight times the equity it invested in Dalia Energies in 2007.