Ofer Yannay seeks $200 million for Nofar’s legacy solar business
Nofar is offering to sell its rooftop solar and storage operations as it looks to reduce leverage and strengthen its cash position.
Ofer Yannay’s Nofar is putting up for sale its core business, the segment with which it originally launched as an energy company. Calcalist has learned that Nofar has approached several entities with an offer to sell its rooftop solar and storage operations for NIS 600 million ($200M). Nofar is seeking NIS 300 million ($100M) of the amount in cash, with the remaining NIS 300 million ($100M) structured as a one-year vendor loan bearing 6% interest, effectively requiring a payment of NIS 318 million a year from now.
The move appears aimed at reducing Nofar’s high leverage and increasing its cash reserves. The operations being offered for sale constitute Nofar’s original business, the activity with which Yanai began his career and on which the current Nofar was built.
Nofar operates in Europe, the U.S. and Israel across several sectors, including power plants, energy storage and solar energy. The business now being offered for sale is Nofar’s “legacy” operation in Israel, held by Nofar Israel, a subsidiary managed by Nadav Barkan. It includes 130 partnerships with kibbutzim across the country, as well as partnerships with other commercial entities.
The portfolio comprises approximately 1,554 solar systems installed on kibbutz rooftops, including dairy barns and other structures, and on water reservoirs. The systems include rooftop solar installations, primarily on kibbutzim, with a combined capacity of 346 megawatts, as well as “behind-the-meter” storage facilities with a capacity of 113 megawatt-hours.
Behind-the-meter storage systems allow electricity generated by a rooftop solar installation to be stored and supplied to a nearby customer. Most of the partnerships involve minority stakes, with Nofar serving as the manager, operator and maintenance provider for the facilities in exchange for an annual management fee. Nofar’s ownership stakes in the project entities, which were established in various locations, primarily kibbutzim, range from 15% to 100%. The company has been building these facilities since 2012.
In late July, Nofar secured a credit facility from Bank Leumi for these projects. The financing is intended to refinance existing debt, release some of the capital invested in the projects and finance the enhancement of solar assets and storage facilities operating in Israel.
The facility will allow Nofar to replace existing financing with longer-term debt and reduce financing costs while extending the average maturity of the project debt. Nofar estimates that the financing will enable the release of significant capital from the relevant project entities, an element it has highlighted to potential buyers. However, the credit facility from Leumi is contingent on approvals from the various kibbutzim that are partners in the projects.
Under the proposed deal, most of the entities and operations would be consolidated under a single partnership, to be named “Nofar Israel LP.” The rights to the partnership would then be sold to the buyer “as is,” without due diligence. The remaining operations would be transferred to the central partnership during the year following completion of the acquisition.
The decision to put these operations up for sale is notable because they represent a material part of Nofar’s business, both commercially and in terms of the company’s history. The move comes just as institutional investors have been increasing their exposure to Nofar Israel.
Just last week, a deal was finalized in which Meitav invested NIS 200 million in Nofar Israel for an 8.7% stake, based on a pre-money valuation of NIS 2.1 billion and a post-money valuation of NIS 2.3 billion. Nofar Energy, controlled by Yannay, and Bank Leumi hold 70% of Nofar Israel’s shares.
Last month, Clal Insurance invested NIS 308 million in Nofar Israel at the same valuation, acquiring an 18.75% stake. Meanwhile, Nofar’s own valuation has fallen to NIS 5.8 billion, after approaching NIS 10 billion earlier this year.
Nofar Israel, managed by Barkan, is preparing for an IPO at a valuation of NIS 2.5-3 billion within the coming year. The company has also completed two significant acquisitions.
In late July, it signed a deal to acquire a 47.5% stake in the Reindeer power plant in the Sharon region for NIS 855 million. It subsequently acquired a 92.5% stake in Highlight, a company also active in rooftop solar, although outside the kibbutz sector. That business is not included in the operations being offered for sale, and Nofar paid NIS 200 million for it.
Nofar Israel also operates in energy storage and electricity generation, as well as conventional power generation and electricity trading. Its portfolio totals 12.3 gigawatts, of which 0.2 gigawatts are grid-connected, 3.2 gigawatts are under construction or nearing the construction phase, and the remainder are at various stages of development.
Nofar declined to comment on the reported sale, saying that it does not typically comment on rumors. “Should an event arise requiring disclosure, we will act accordingly,” the company said.
