Clal Insurance, led by Izzy Cohen, has acquired 3% of Israeli Highway 6 from Israel Infrastructure Fund (IIF) increasing its holdings to 22%.The firm has paid NIS135 million (US$37.4 million) to the fund.
Highway 6 is the first Israeli build-operate-transfer (BOT) road carried out mainly by the private sector. Highway 6 stretches over 140 kilometers, from the Ein Tut interchange in the north to the Maahaz interchange in the south.
The concession is due to expire in 2029, when it will be returned to the state.
IIF exits the investment with a yield of about 100% in four years, since the date of investment. Investors in the partnership established for the purposes of the investment, have already received a return of 30% on their investment.Highway 6 has doubled in value through a series of transactions over the past 4 years.
Following the transaction, Cohen stated:
"The current purchase is part of Clal Insurance's strategy in equity (shares) transactions, both in the infrastructure world and in general, in order to obtain maximum yield for the buyers and high, excess yields in the current low interest environment. In light of our significant current investment in Highway 6, the flagship of Israeli infrastructure assets, we chose to continue investing in its shares."
Since Cohen's arrival at Clal Insurance around two years ago, the company has become one of the dominant players amongst institutional entities in non-tradable credit transactions and direct investments in real estate and infrastructure. This company activity was also expanded abroad through the establishment of the Clal USA subsidiary.
IIF is the first Israeli private equity fund, specializing in managing infrastructure and energy assets, with more than US$1 billion under management. Amongst IIF's prominent investments are Dalia Energies power plant; CityPass (the Jerusalem light rail concessionaire); Swissport - cargo terminal; Hayovel Lines - route 431; and Milgam.