Israel Corp.'s China Venture May Make Electric Cars (Update2)
By Alisa Odenheimer and David Rosenberg
May 21 (Bloomberg) -- Israel Corp., the holding company controlled by the billionaire Ofer family, may dedicate its Chinese automobile venture exclusively to making electric cars within five years, Chairman Idan Ofer said in an interview.
The 5.8 billion-yuan ($830 million) partnership with Chery Automobile Co. may generate savings by working with Project Better Place, another Israel Corp. unit that's planning a global network of battery-recharging stations, Ofer said. The venture, based in the eastern province of Anhui, will initially build conventional sedans for the U.S. and European markets, he said.
Ofer, 52, is leading Israel Corp. out of its domestic market and reducing its reliance on chemicals and shipping with acquisitions in China, Latin America and Africa, and in industries such as energy and cars. The company last year invested $100 million in Better Place, which was started by SAP AG's former chief software architect Shai Agassi.
``If you'd asked me a year ago, I would have said I know nothing about electric cars,'' Ofer told Bloomberg Television from his office in Tel Aviv. ``Now I'm convinced about the business case and the environmental case.''
In the past two years, Ofer bought control of Oil Refineries Ltd., Israel's biggest refiner, and invested in Inkia Energy Ltd., which operates utilities in six Latin American and Caribbean countries. Project Better Place is working with Renault SA and Nissan Motor Co. and its investors include Morgan Stanley and former World Bank president James Wolfensohn.
`Challenge'
``The Chery venture and Better Place both have a lot of potential, but both are in their beginning stages,'' Yuval Zehira, an analyst at Tel Aviv-based Israel Brokerage & Investments Ltd., said by telephone. ``The challenge for Israel Corp. will be to get these projects up and running.''
Israel Corp. rose 109 shekels, or 2.6 percent, to 4,309 shekels on the Tel Aviv exchange. The stock has risen 56 percent in the past 12 months. Its $10 billion market capitalization is less than the value of its 52 percent stake in Israel Chemicals Ltd., the fertilizer maker whose shares doubled in the period.
Ofer reiterated his plan to boost Israel Corp.'s market capitalization to $20 billion by 2012.
``The market perhaps doesn't understand what we're doing, but I'm not worried,'' Ofer said. ``Once they realize the strength of these investments and the tremendous growth potential of these investments, we'll see an increase in the value.''
Israel Corp. is seeking ``opportunities'' in car manufacturing, shipping and chemicals industries in India, Ofer said. Ofer is also exploring possible acquisitions in water and waste-management businesses, the executive said.
Palestinian Partnerships
Israel Corp. aims to announce plans in the future for ``cooperation'' with Palestinian companies, Ofer said, without elaborating. Better Place will be extended into the Palestinian Authority, he said, adding it is ``essential'' for businesses from Israel and the Arab world to cooperate.
Israel Corp. will use the Inkia unit to invest in power generation in India, Africa and Israel, said Ofer, who spent 15 years in Hong Kong and Singapore managing his family's global shipping business before taking over Israel Corp. in 1999.
``It's obvious that the planet is going to run out of oil and the question is what's going to replace it,'' he said. ``I would like to get into nuclear power, too.''
Dividends from the Israel Chemicals unit are helping to finance acquisitions by the parent company, reducing Israel Corp.'s need to tap the capital markets. Ofer said an increase in global demand for fertilizers is a ``long-term trend'' and he ``would like to'' bolster the chemicals unit through purchases. |
