Whoever believes in it gains a lot: the price of a share Wireless electron (TASE: ELWS), is up almost 300% in the past year. The company, a developer of smart roads that has yet to generate significant revenues, now has a market capitalization of about NIS 2.8 billion, making it worth hundreds of millions of shekels to each of its major shareholders, on paper.
Two of these investors are well-known in the capital market for companies in completely different sectors. The first is Ran Blinkis, one of the founders of the AM:PM department store chain, and the second is Yitzhak Haggag, one of the controlling shareholders of the Haggag Real Estate Development Group, who is currently the largest shareholder in Electreon.
Electreon was founded in 2013 by Oren Ezer, who serves as Chairman and CEO of the company, Hanan Rumbach, and others. It has developed technology to charge electric cars while they travel. It is currently implementing collaborative projects with companies and organizations in the automotive and transportation sectors, especially in the United States and Europe.
Shareholders of the company, which became listed in 2018 through a merger into a shell company on the stock market, have come a difficult way in the past few years. Since the stock price’s low in December 2022, it has risen 662% on the back of the electric vehicle trend. However, the price is still a third below its peak three years ago. The company’s market capitalization places it in the Tel Aviv 90 Index, with an average daily trading volume for its shares of NIS 6.5 million.
Ran Blinkes owns 7% of Electreon. He was first reported as an interested party in the company in 2021. He is estimated to have invested around NIS 100 million in purchasing the shares. At the low point, the value of that property had shrunk to just NIS 30 million, but after the recent surge, it is worth about NIS 200 million, giving him a paper profit on the investment of almost 100%. In 2006, Blinkis, along with his brother Gal and their partner Guy Edri, sold the AM:PM department store chain in Tel Aviv to the gas station company Dor Alon for NIS 150 million. Since that exit, Blinkis has focused on developing his residential, office and commercial real estate business in Tel Aviv, through his company City Boy.
Haggag led a group of investors who bought Electreon shares in a private placement in June 2022 at a price of NIS 70 per share. He later increased his stake in the company, purchasing shares worth an estimated NIS 100 million. He currently owns 14.3% of the company, a stake worth about NIS 400 million, four times his investment. This, by the way, is higher than the NIS 314 million value of his 30% stake in the Haggag group, which he controls with his brother Ido.
Another major shareholder who has believed in Electreon from the beginning is Yaron Jacoby, who is mainly active in real estate investing in the United States. Jacoby owns 7.7% of Electreon, a stake worth NIS 214 million. Among the financial institutions in Israel, only one has an interest in the company, Clal Insurance, which holds a 7% stake, mainly through the savings funds it manages, worth about NIS 200 million. The company’s founders and directors, Ezer and Rombak, each own 13.4% of Electreon, worth more than NIS 370 million.
Burning hundreds of millions
Regarding the company’s business performance, in the first half of this year it recorded revenues of 19 million shekels, that is, double the revenues in the corresponding period of last year (revenues for 2023 as a whole amounted to 23 million shekels). This figure is derived from revenue recognition from projects in Germany, Israel, France and the United States. Electron is still making losses – NIS 37 million in the first half of this year, similar to the loss in the corresponding period – mainly due to significant spending on research and development (NIS 27 million). Since its founding in 2013, the company has burned around NIS 360 million.
Although it records losses at a rate of NIS 60-70 million annually, at the end of June this year it had more than NIS 90 million in cash, thanks to its ability to attract more and more investments. Last September, it issued a private equity offering worth NIS 50 million to a car manufacturer whose name it cannot reveal. In the past, the company gave options to Clal Insurance at an exercise price that, according to informed sources, was a very large amount. If the options are exercised, this will inject another NIS 50 million into the company. So Electreon has enough cash for two years of activity.
Electreon describes itself as a technology company that aspires to help with the transition to electric transportation. It has developed a unique wireless charging technology, including on-road infrastructure, vehicle-mounted hardware, and cloud software. The technology is designed to enable fast and safe vehicle battery charging, extend vehicle range, reduce overall maintenance costs, and enable EV fleet operators to decentralize charging, so vehicles can carry smaller batteries.
Despite the difficult year Israel had due to the war, Electreon was able to develop and maintain its cooperation around the world, including in Norway, where it has a project to build a smart route for an urban bus company. There is another cooperation with the delivery company UPS in the United States to charge electric cars at the company’s warehouses. In Israel, Electreon has been selected as the sole provider for the wireless charging project for Metronit bus lines in Haifa.
As part of a cooperation agreement with Japanese auto parts manufacturer Denso, the latter invested $10 million in Electreon last year and became a shareholder. Denso has been separated from Toyota, of which it owns 25% of the shares.
Elon Musk was encouraged by his comments at a highly publicized Tesla event two weeks ago, where Electreon unveiled the Cybercab, a self-driving vehicle without a steering wheel or pedals. Musk said that these taxis will be charged via electric methods, which may give an additional boost to Electron’s business.
Published by Globes, Israel Business News – en.globes.co.il – on October 29, 2024.
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