The Delek Group conglomerate might list on the London Stock Exchange as early as next year as part of a strategy to become a global oil and gas exploration firm, a source close to the company said Tuesday.
Delek had planned a London listing in mid-2015 but halted the process due to energy market volatility and regulatory issues in Israel. Israel’s anti-competition regulator had ruled that two large natural gas fields, Leviathan and Tamar, largely owned by Delek and Noble Energy, were a monopoly, since both companies would control most of Israel’s gas reserves. Agreement was subsequently reached that would allow Noble and Delek to keep ownership of Leviathan, but they would have to sell other assets.
The Knesset has given its nod to the deal, but it still needs to be finalized and signed. Issues relating to the powers of Israel’s competition regulator in relation to the ownership of the field also need to be resolved, but Delek expects this to happen soon, the source said.
“After the roadmap is approved and signed, which we believe will happen in the next couple of weeks, you will see the process of listing Delek Group in London start to move forward,” the source told Reuters, without giving any further details such as how much money the company planned to raise.
The source said Delek had been reassured by comments from Prime Minister Benjamin Netanyahu and Energy Minister Yuval Steinitz that they will do what they can for the deal to be implemented. “Their support of the roadmap for the Israeli economy also supports the intention of Delek in 2016 to list in London,” the source said.
As part of the listing plan, foreign banks had told Delek it needed to focus solely on energy. Delek has since sold off most of its auto, real estate and financial services businesses. Last week, Delek’s investment arm bought a near 20% stake in North Sea-focused oil producer Ithaca Energy for $66 million.
“This has been on our radar for quite a while,” the source said, noting the Ithaca deal was one of many steps the company would like to take. “We are the biggest shareholder in Ithaca with almost 20% and we shall consider increasing it.”
The source said buying a stake in Ithaca “leaves the door open for other opportunities, including operating in our own gas discoveries.”
Over the past year, Delek Group shares have lost about 35% of their value, sending the company’s value down to its lowest point for more than two years, caused in part by difficulties in obtaining approval for the natural gas regulatory framework and a decline in world energy prices. Against this backdrop, Delek’s controlling shareholder, Yitzhak Tshuva, met with a group of institutional investment managers and analysts, according to one industry source, “to renew contact with the capital markets.”