Mizrahi Tefahot lends Omer Adam’s server farm co NIS 410m

Mizrahi-Tefahot Bank lends 410 million shekels to Annan data centers. Behind the project is PAI, a company owned by singer Omar Adam and his family. Adam’s business partners, the Maor brothers and Sinir Maloul, owners of the real estate company HSM Europe-Israel Investments; and the Swiss-based Layan Group of Nissim Sarel Gaon. The consortium plans to build a large server farm adjacent to Kibbutz Tzora off Route 38. The consortium will contribute capital of NIS 150 million to the project. The server farm will cost about 550 million shekels.

Two years ago, the consortium leased the land in a deal whose details were not disclosed, and recently obtained a building permit from the Mateh Yehuda local council. Initial drilling work is expected to begin in November.

The cutting farm at Tsor’a will be built in an HPC (high-performance computing) configuration, that is, with many connected servers that can perform complex computing tasks and artificial intelligence processing. It will be built at a depth of thirteen meters on a total area of ​​18,000 square meters, and its final output is planned to reach 32 megawatts, although the initial output will total 16 megawatts, of which 10 megawatts will power servers and 6 megawatts. The megawatt will power peripheral systems such as cooling equipment, and will be connected to a local IEC substation under an agreement to supply up to 16 megawatts of power.

Unusually, the loan was raised from Mizrahi-Tefahot Bank without any requirement by the bank to obtain personal guarantees from consortium members or the primary customer, conditions familiar to server farm financing deals that have prompted other Israeli real estate companies to withdraw from the field. It is believed that several banks competed for the deal, including Bank Leumi. For Mizrahi-Tefahot Bank, the deal was managed by Adam Ben Yehuda, head of project finance in the corporate banking division headed by Ofir Murad. The bank is considering financing more server farm deals, and recently participated in recycling $400 million in loans from Compass, which runs Amazon Israel server farms. Anan Data Centers was advised by DIT Data Centre, headed by Nir Poltorak, who planned the installation and served as a technology strategic advisor alongside Deloitte.

Annan Data Centers actually consists of two separately organized groups: Omar Adam’s PAI and the Melloul brothers’ Europe-Israel Company, which is believed to own more than half the shares in the venture; And Gaonlian Group, which owns more than 40%. Adam and Mauer Millool are close friends and business partners, and together they have executed income-generating real estate deals for over a decade, amassing the majority of their holdings from deals in which they purchased and renovated buildings.

A Globes examination found that the value of the group’s income-generating assets exceeded NIS 1.5 billion. These assets include the Queen of Sheba Mall in Eilat, which was purchased from Melisron in 2020; Kenyon Hamakim Mall in Afula, which was purchased for NIS 120 million in 2023; The Almog complex in Eilat, which consists of 420 apartments for Eilat hotel workers, was purchased from Almogim for tens of millions of shekels; The Gani Yalim protected housing complex in Beersheba, which consists of 207 housing units; The Bezeq House on Lazarov Street in Rishon Lezion was purchased from the Shlomo Group.

The value of Annan’s data centers is estimated at NIS 550-600 million. Adam himself and his family-owned business group, PAI (Production Adam Investments), also own an Israeli music empire, where Adam is an artist among others. The group represents other artists, including Gal and Roui, the Adam brothers. Osher Cohen; odia; and Shai Horovitz (aka ShrekDiMC). The group is said to be partnering with NMC United, controlled by the Edri family, Aroma Music, and producer Benny Menashe, in creating a company to distribute music content and collect royalties from digital platforms such as YouTube, Spotify and Apple Music. .

HSM Europe-Israel Investments has been active in the past in purchasing and renovating buildings in Romania and Georgia. It began its activity in Israel by purchasing plots of land in Afula. Based on the long-standing friendship between Maor Milul and Omar Adam, they developed a business partnership, purchasing land in Afula to build a 64 MW server farm, but the project in Tzoura was more successful due to its proximity to power. Infrastructure.

In 2020, Adam and Maor Millul met Nissim Sariel Gaon, owner of the Swiss investment firm Lian Group. Gaon, a Swiss Jew with a degree in mathematics from the University of California, Berkeley, was living in Dubai that year, and met Adam and Melul when he was looking for a place to stay on Saturdays. Through Lian Group, he invests in subsidiaries in the digital health and blockchain space. By investing in a cryptocurrency mining farm, he entered the field of microfarms and supercomputing. Today, Gaon, the grandson of Swiss Jewish businessman Nissim Gaon, owns server farms across Europe. As far as is known, and despite the international standing of its partners, Anan Data Centers invests only in Israel.

Great potential in Israel

Israeli server farm markets have seen a revival in the past few years thanks to the government’s cloud computing tender, which obligated cloud computing giants like Amazon and Google to operate from computing facilities inside Israel, and also thanks to the Abraham Accords, which made it considered transferring data between Israel, the United Arab Emirates, and Saudi Arabia via Submarine cables are a reasonable suggestion. Specialized companies such as Schoenfeld Engineering and server farms emerged, while real estate companies such as Cardin-Geva became active in server farms. However, this sector is complicated by strict regulation, high energy and computing costs, and deficiencies in energy infrastructure. Several Israeli companies exited the field locally, such as the Azrieli Group, while others that were considering entering it, such as Melisron, ultimately declined.

According to digital infrastructure consulting firm 11Stream, owned by Yonit Goldberg and Oren Naaman, Anan Data Centers has the potential to become one of the five largest server clusters in Israel, with a total output of 130 megawatts at its two Tzora sites. and Afula by 2030. This means that Annan Data Centers will own about 14% of Israel’s server farm sector by the end of the decade.

Mizrahi-Tefahot Bank and Annan Data Centers declined to respond to the report.

Published by Globes, Israel Business News – en.globes.co.il – on October 8, 2024.

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