Kardan NV (TASE: KRNV;AEX:KARD) is spinning of its Israeli operations into a new public company, Kardan Yazamut (2011) Ltd., which will take over Kardan's 74% holding in Kardan Israel Ltd. (TASE:KRIS) and its indirect 97% stake in Milgam Municipal Services Ltd., which collects debts for municipalities.
Kardan's international activity includes real estate through Globe Trade Centre Holding Ltd. and its subsidiaries in Eastern Europe and China, Kardan Financial Services BV (KFS), and water infrastructures company Tahal Group International BV. Kardan Israel controls Kardan Real Estate Enterprise and Development Ltd. (TASE: KARE), Dan Vehicle and Transportation Ltd. (Avis Israel) (TASE: DVT), car importer UMI Ltd., and communications interests.
Kardan NV will today file a draft prospectus with the Israel Securities Authority and the Tel Aviv Stock Exchange (TASE) for an IPO by Kardan Yazamut. Kardan NV will also transfer €70 million in debt to Kardan Yazamut. Kardan NV expects Kardan Yazamut to have an equity value (net of debt) of €25 million, based on the valuations of Kardan Israel and Milgam.
The main objective of the spin-off is to enable Kardan NV to focus on its real estate operations in Central and Eastern Europe and in Asia and its water infrastructure business in emerging markets. KFS, which operates in Eastern Europe, currently amounts to just 15% of Kardan NV's activity.
In conversations with private and institutional investors, Kardan implied that its core international operations should attract foreign investors to the company. In the long term, Kardan plans two main ways to create value: an IPO by GTC China Ltd. and an IPO of Tahal in London or on an Asian exchange.
Last year, Kardan NV sold assets worth NIS 4 billion and it intends to continue reducing its debt, in order to improve its bonds rating, which is currently BBB. Kardan NV's share price has fallen 23% since the beginning of the year, in line with the fall in the share price of subsidiary Globe Trade Centre SA (WSE:GTC) (GTC Poland). Kardan Israel's share price is down almost 40%, and it was relegated from the Tel Aviv 100 Index.
Kardan's share price fell 1.2% in morning trading today on Amsterdam to €3.17. The share price fell 0.8% on the TASE to NIS 15.52, giving a market cap of NIS 1.75 billion, and Kardan Israel's share price fell 0.3% to NIS 5.33, giving a market cap of NIS 434 million. Trading in the two shares on the TASE today was suspended.
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