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Josef Elias, one of three partners in the Green Lantern Group, which completed an agreement Sunday to invest 50 million shekels in the Cofix Group, is confident it is.
“We think there’s great potential in expanding the innovative Super Cofix concept internationally,” he said. “We’re seriously investigating opportunities overseas and believe in the market disruption that Cofix’s controlling shareholder, Avi Katz, is leading.”
Cofix Group is most famous for its Cofix chain of cafes, where everything from soup to nuts (and, of course, coffee) sells for five shekels. But Green Lantern is putting its money – which is coming in the form of $20 million in cash and the rest as a loan – into the cafes’ sister chain of groceries, Super Cofix.
With Israeli shoppers focused more than ever on prices, Super Cofix has easily found a niche in the food retail sector. Each Super Cofix will carry a range of about 600-700 products on its shelves, but despite the limited selection Super Cofix says it offers all the basic necessities a typical household needs.
Super Cofix opened its first store in September 2013 and today counts 10 branches, with another 11 in development. That makes it a minnow even by Israeli food-retailer standards, with revenues last year of just 5.4 million shekels. But Katz has big ambitions – opening two new stores every month till he reaches a target of 120. Green Lantern is providing the financing.
“Beyond the financing contribution, the partnership with Green Lantern is strategic and professional. The fund managers have a lot of experience in food retail,” said Haim Aharon, Super Cofix’s CEO.”
Besides Elias, Green Lantern’s three partners are Danny Ben-Rei and Richard Hunter, the latter a UK immigrant who has been CEO of McCann Erickson Israel and of Israel’s biggest supermarket chain, Super-Sol. To date, the fund has invested 200 million shekels in other businesses, among them the Holmes Place chain of fitness centers.
Aharon is a little more circumspect about taking the Cofix concept overseas and indicated the focus this year would be on domestic expansion. “We’re always getting calls about the possibility of launching a chain of cafes of Super Cofix abroad, and we’re exploring them. At the moment, there’s nothing concrete,” he said.
Cofix Group began trading on the Tel Aviv Stock Exchange last May after it merged with a shell company. In the period that followed, its shares rallied and at their peak the company had a market capitalization of 210 million shekels. But since then, its price has fallen by close to a third and on Sunday it closed up 0.6% at 13.05 shekels.
One reason for the shares’ decline is the concern about fourth-quarter earnings, which won’t be published until next month. Winter is usually a low point for supermarket sales, but Super Cofix is especially vulnerable because its main branches are in Jerusalem, which has been hit hard by the wave of Palestinian stabbing attacks over the last five months, said Aharon.
“The malls are reluctant to rent to the chain and so most of our stories on street stores,” he said. “The security situation in Jerusalem affects us.”