Aluma 2025: The exits validated the marks, but the cash still has to reach the fund

Getting to Know the Company

Aluma is not an operating infrastructure company. It is a public investment fund that holds operating platforms across communications, energy, and environmental services. That sounds like an accounting distinction, but it is really the whole thesis. Anyone reading the fund's bottom line as if it reflects operating cash generation is missing the point: most of the value here is created through fair-value marks, exits, management fees, dividends, and shareholder-loan repayments from portfolio companies, not through line-by-line consolidation of the underlying businesses.

What is working right now is fairly clear. In 2025 fund-attributed EBITDA, weighted by ownership, rose to ILS 75.1 million from ILS 59.3 million in 2024 and ILS 38.0 million in 2023. NAV rose to ILS 468.1 million from ILS 441.0 million at the end of 2024. The fund also signed two meaningful exits, in Exelera and ESCO, which give outside validation to carrying values that had previously been mostly a question of internal and external valuation work.

But the active bottleneck is no longer asset quality. It is parent-level liquidity. At the fund level operating cash flow remained negative, financing costs rose, and the capital released by exits now has to answer three competing demands: debt service, expansion of existing platforms, and the opening of a new investment cycle. So the right read on Aluma in 2025 is not simply "a fund with NAV well above market cap." It is a fund that has reached the point where investors need to test how much of that NAV can actually become cash accessible to the public holding company.

A superficial reader can also miss two additional points. First, the largest asset, Exelera, was already carried at ILS 381.7 million at year-end 2025, so the sale agreement is not necessarily a major additional accounting upside event. It is primarily a cash-conversion event. Second, on the positive side of those exits, a new capital cycle is already forming around GreenMix and Super Pipe. So even if cash does arrive, the market will still ask whether it truly reduces friction at the parent, or simply funds the next round of capital deployment.

Four findings that do not jump out on a first read:

• Exelera is the story. Its carrying value stands at ILS 381.7 million out of a total investment portfolio of ILS 622.3 million, so most of the fund's value is still tied to a single asset.
• The portfolio improved, but net income weakened. Fund-attributed EBITDA rose 27%, while net profit fell to ILS 26.8 million, partly because fair-value gains moderated and net financing expense climbed to ILS 11.5 million.
• There are no employees at the fund level, but there is fixed friction. The fund has no direct employees, paid ILS 9.8 million in management fees and another ILS 4.2 million in other operating costs, while dividends received from portfolio companies fell to just ILS 2.2 million.
• Liquidity improved after the balance sheet date, but capital needs also grew. ESCO already generated cash and shareholder-loan repayment, but GreenMix received another ILS 5 million under softer terms, and a new convertible-bond option is already on the table.

The Value Map at the End of 2025

From a market-screening perspective, short-interest data also tells an interesting story. Short float stood at just 0.22% at the end of March 2026, versus a sector average of 1.12%, while SIR stood at 0.78 versus a sector average of 3.14. In other words, the discount in the stock does not look like an aggressive short thesis on collapse. It looks much more like ordinary market skepticism about whether management can actually turn portfolio value into parent-level liquidity.

Events and Triggers

Two exits, but not the same kind of event

The biggest event is Exelera. On November 30, 2025, Aluma signed an agreement to sell all of its Exelera shares for total consideration of about ILS 500 million, subject to adjustments. The fund's share of the proceeds is expected to be around ILS 390 million, and based on the adjustments known at the report date the fund said its share would have been about ILS 380 million. In February 2026 the Israeli competition authority approved the deal, which is a material closing condition, but the fund also said additional regulatory conditions remain and it cannot accurately assess whether and when those will be satisfied.

That is the core of the story. Exelera was already carried at ILS 381.7 million at the end of 2025. So if the deal closes soon and within the adjustment range the fund itself flagged, the main effect is not a dramatic jump in NAV. The main effect is that the single largest valuation component in the fund turns into cash or near-cash. In other words, Exelera is now less a question of "what is it worth" and more a question of "when and on what terms does that value land at the fund level."

ESCO is different. Here the partial sale already closed in January 2026, and the fund sold 38% of ESCO Aluma for immediate cash consideration of about ILS 40.8 million, received early repayment of about ILS 12.4 million of shareholder-loan principal, and locked in deferred consideration of ILS 20 million payable within two years. At the same time, Aluma's effective stake in ESCO fell to about 19.32%. So ESCO is not just a liquidity event. It is also a structural event: less control, less concentration, and less full participation in future upside from the energy platform.

The environmental platform is still asking for capital

If the exits validate asset quality, the environmental platform is the reminder that Aluma is still building. GreenMix already received a CPI-linked convertible loan of ILS 20 million in August 2025 at a 12% annual rate, and in January 2026 the agreement was amended to provide another ILS 5 million. But the more important point is not the amount of money. It is the shift in terms: the additional equity purchase commitment was reduced, and the temporary company valuation for conversion and share purchases was cut from ILS 90 million to ILS 70 million.

That is an important yellow flag. On one hand, Aluma improved its entry terms on paper and received an additional option of up to ILS 10 million. On the other hand, when the temporary valuation comes down and the company still needs bank financing as a condition for the next step, it means the environmental platform is still in the proof stage, not the harvest stage.

Super Pipe adds to the same picture. In March 2026 the fund extended a loan of ILS 7 million at prime plus 1%, with room for another ILS 5.5 million and an option structure that could eventually lead to 30% and then 60% ownership. That can become a real growth engine later, but it is also another cash use arriving exactly when the market is waiting to see cash move up to the parent.

The next test is funding structure, not just exits

On March 15, 2026 the fund announced it was considering a new Series G convertible bond and attached a draft indenture and a summary of proposed terms. This is still not a completed financing, but it is a very clear signal. Management is not simply waiting for ESCO and Exelera cash. It is also building another funding option.

The published draft included relatively flexible covenants, including minimum equity and NAV of ILS 200 million and a maximum net-financial-debt-to-assets ratio of 60%. The fact that Aluma is exploring such a deal tells the market something important: the critical question for 2026 is not whether there is value in the portfolio. It is what combination of exits, refinancing, and new capital the fund plans to use to move into the next phase.

Efficiency, Profitability and Competition

At the portfolio-company level, the engines are still working

The strongest line in the report is not fund-level net income. It is fund-attributed EBITDA. That rose to ILS 75.1 million in 2025, from ILS 59.3 million in 2024 and ILS 38.0 million in 2023. That is the clearest evidence that the underlying companies are still improving operationally.

That improvement comes from several directions at once. At Exelera, revenue rose to USD 34.1 million from USD 29.7 million, and adjusted EBITDA rose to USD 15.4 million from USD 10.9 million. At ESCO, revenue rose to ILS 200.4 million from ILS 151.5 million, and adjusted EBITDA rose to ILS 31.9 million from ILS 30.3 million despite one-off costs and an impairment in Yahal Energy. Chen Hamakom improved both revenue and adjusted EBITDA, and Oganim delivered growth in both sites and revenue. Shiloni was the exception, with weaker revenue and EBITDA due to softer agricultural demand.

So the fund's "value creation model" is not resting only on marks. There is real operational progress across a large part of the portfolio. That matters because it is what makes the exits look credible rather than opportunistic.

But at the fund level, profitability is less clean than it first appears

This is where the gap between the business and the listed security shows up. In 2025 the fund recorded a positive fair-value change of ILS 50.7 million, versus ILS 62.4 million in 2024 and ILS 91.3 million in 2023. At the same time, net financing expense climbed to ILS 11.5 million from ILS 7.0 million in 2024 and ILS 4.6 million in 2023. That is why net income fell to ILS 26.8 million even though the underlying assets kept improving.

That matters because Aluma can show a healthier portfolio and still look less impressive in reported earnings. That is not necessarily a sign of weak assets. It is a sign that the public fund layer adds capital costs and management costs that have to be paid before shareholders benefit from the improvement below.

There is concentration, not just diversification

The fund talks about three activity pillars, but value is still heavily concentrated. Exelera alone accounts for about 61% of the investment portfolio and roughly 82% of NAV. ESCO adds another 17.5% of the portfolio. Chen Hamakom, Oganim, Shiloni, and GreenMix are meaningful additions, but they are not yet true counterweights to Exelera's importance.

That is critical for understanding both quality and risk. On the positive side, the fund has clearly shown it can identify and build one very large winner. On the negative side, any delay, adjustment, or disappointment around Exelera matters far more than operational progress at Shiloni or GreenMix.

Cash Flow, Debt and Capital Structure

The right frame here is all-in cash flexibility

There is little value in discussing "normalized cash generation" at Aluma as if it were a standard operating company. This is a listed investment fund, so what matters is the all-in cash picture after real cash uses: management costs, operating expenses, interest, new investments, refinancing, and debt service. That is exactly the all-in cash flexibility frame.

On that basis, 2025 was weaker than a simple NAV reading suggests. Cash flow from operations was negative ILS 12.3 million. Investing cash flow was negative ILS 27.0 million, mainly because of the Shiloni acquisition and the GreenMix loan. Financing cash flow was positive ILS 37.7 million thanks to Series B bonds, but that money also funded the full repayment of Series A. Year-end cash fell to ILS 8.3 million, while short-term deposits stood at ILS 8.8 million.

There is no covenant stress, but there is strong timing dependence

The key point is that Aluma does not look like a near-term covenant story. Series B bonds carried a book value of ILS 119.2 million at the end of 2025. Equity and NAV stood at ILS 468 million, versus a covenant floor of ILS 255 million. Net financial debt to assets was about 16%, versus a 55% ceiling, and LTV stood at 43%, versus a 65% ceiling.

So this is not immediate balance-sheet distress. But it is not free liquidity either. The fund itself said principal and interest payments on Series B bonds for 2026 and 2027 total around ILS 14 million in each year. When parent-level cash and short-term deposits stood at only about ILS 17.1 million at the end of 2025, it is clear the model depends on a steady flow of cash upward, not just value sitting on paper.

Created value is larger than accessible value

This is probably the single most important takeaway in the report. Total investment value stands at ILS 622.3 million, but NAV is only ILS 468.1 million. That gap is not an error. It reflects about ILS 119.2 million of bonds, ILS 51.8 million of deferred tax liabilities, other liabilities, and a layer of assets and obligations that is not immediately liquid.

But even NAV does not tell you how much cash is truly available at the fund. For that value to become accessible, portfolio companies need to distribute dividends, repay shareholder loans, or be sold. And this is exactly where the friction shows up. In 2025 dividends received by the fund totaled only ILS 2.2 million, down from ILS 6.37 million in 2024. Exelera paid no dividend, and Oganim had only ILS 0.7 million of distributable profits. ESCO Aluma had ILS 1.3 million left, Chen Hamakom had ILS 8.8 million, and Shiloni had ILS 14 million.

The picture is straightforward: value exists, but the path upward is still narrow. That is why Aluma's economic value is much higher than its immediately available cash, and that gap is exactly what the market is reluctant to value generously.

The external-management layer creates its own friction

The fund does not employ people directly. Management services are provided by a management company, and the management-fee base includes the value of assets held by the fund, including cash and cash equivalents. That is not a cosmetic detail. In 2025 the fund paid ILS 9.8 million in management fees and another ILS 4.2 million in other operating expenses.

That means any waiting period in which value exists but liquidity has not yet arrived is also a period in which the parent layer keeps consuming resources. So the key question is not only whether exits will happen. It is also how quickly the cash they generate will actually reduce this friction.

Outlook

If management frames 2026 as a scaling year, the market is more likely to read it as a bridge year with a liquidity test. The model has already been validated through two exits. The next question is whether that validation produces cleaner strategic room, or merely opens a new investment cycle before parent-level friction is actually resolved.

The first thing that has to happen is Exelera closing

Exelera is not just another investment. It is the central value driver. So the most important trigger over the next two to four quarters is completion of the sale and conversion of that stake into cash on terms close to what the fund has already indicated. If that happens, the market will get further confirmation that carrying values were reasonable, and more importantly it will see a real inflow of cash to the parent.

If that does not happen, or if deal adjustments turn out to be much heavier than expected, the issue changes from "value that has not yet become accessible" to "value the market no longer fully trusts." That would matter far more than any incremental progress at Oganim or Shiloni.

ESCO now has to prove the partial exit did not kill too much upside

At ESCO the transaction is already done, so the next question is the quality of the post-sale position. On the positive side, the fund has already received more than ILS 53 million in cash and shareholder-loan repayment, with another ILS 20 million still due. On the negative side, the ownership stake fell sharply, so future operational improvement at the energy platform will contribute less to the listed fund than it did before.

That means the market will look for a two-part answer: was the exit the right move to convert value into liquidity, and can the remaining 20% in ESCO Aluma still generate enough ongoing value and upstream cash to matter? If not, ESCO can quickly move from value-creation proof to a reminder of upside already given away.

GreenMix and Super Pipe will determine whether 2026 is a proof year or a funding year

Both moves signal that the fund still wants to deepen its environmental platform. That can eventually become a serious growth engine, especially if GreenMix secures bank financing and reaches the final valuation mechanics embedded in the investment structure. But for now this is still an option being financed with real cash.

If Aluma has to commit more capital before older assets generate enough upstream cash, 2026 remains a bridge year. For it to become a proof year, investors need to see that new money is buying operating progress and shortening the path to monetization, not merely extending runway.

A new convertible bond could solve one issue and open another

The possible Series G convertible bond is a classic two-sided move. On the positive side, it can give the fund additional funding flexibility, buy time until exits close, and avoid pressure to monetize assets at an inopportune moment. On the negative side, it could also extend the in-between phase in which the parent keeps funding growth before the market has seen enough proof that the existing portfolio can send real cash upstream.

So the real question is not only whether the bond gets issued. The real question is the story around it. If new capital comes after Exelera closes and alongside visibly lower funding risk, the market can read it as acceleration. If it comes before those milestones and alongside further capital injections into younger platforms, the read will likely be less generous.

Risks

Exelera concentration

When one asset carries such a large share of value, execution risk around that asset becomes fund risk. This is not only about closing the deal. Exelera is also exposed to FX, and the fund itself noted that the dollar-shekel rate fell by about 12.5% in 2025. So even in a year when Exelera's dollar value improved, part of that uplift was offset in shekel terms.

High value does not guarantee upstream cash

The fund itself says its sources for meeting obligations include dividends, shareholder-loan repayments, debt refinancing, asset realizations, and capital raises. That is an important admission. It means public shareholders depend not only on operating performance at the subsidiaries, but also on the ability to move value up the structure. Any delay in dividends, refinancing, or exits delays the parent-level solution.

The environmental platform still has many open variables

Chen Hamakom continues to improve operationally, but in the background a mutual arbitration process is ongoing between the fund and the seller. The fund is claiming ILS 19.25 million plus additional amounts, while the seller is claiming ILS 22.5 million plus ILS 1.3 million tied to management services. The fund's legal advisers believe its position is stronger on the management-fee dispute, but the broader claims remain too early to assess. Again, the environmental platform offers upside, but not without friction.

External management and possible dilution

The absence of direct employees at the fund is not merely an operating detail. It means public shareholders own a structure that continues to pay management fees even in periods when value has not yet become liquid. And if a new convertible bond is eventually issued, dilution becomes part of the discussion as well. Not as an immediate crisis, but as a possible price for buying time.

Conclusion

Aluma exits 2025 after a strong proof year at the asset level. The Exelera and ESCO transactions validate management's ability to create and monetize value, and the underlying portfolio continues to improve on EBITDA. The main bottleneck, however, has moved up a level: the question is no longer whether there is value in the portfolio, but how much of it actually reaches the fund and how quickly.

The bottom line is straightforward. Current thesis: Aluma looks like a fund with good assets and an obvious market discount, but that discount will not close just because NAV is high. It closes only if 2026 converts validated marks into cash, lowers friction at the parent, and proves that the next investment round does not consume the very cash that was just unlocked.

What has changed versus the earlier read is equally clear: 2025 moved the story from valuation and promise to signed exits and one completed exit. But the strongest counter-thesis is still alive: the fund may continue to be good at creating value inside portfolio companies while remaining less effective at making that value accessible to public shareholders at the parent.

What can change market interpretation in the short to medium term is the combination of three events: Exelera closing, disciplined use of ESCO cash, and clarity on whether Series G would be a clean bridge or the start of another funding cycle. That matters because for investment vehicles and holding structures, business quality is measured not only by the ability to create value, but also by the ability to move that value up the structure without too much leakage on the way.

Over the next two to four quarters the thesis strengthens if Exelera closes, if remaining ESCO proceeds translate into cleaner parent-level liquidity, and if the newer environmental investments prove they are not just capital sinks. It weakens if monetization is delayed, if new funding arrives before parent-level friction is reduced, or if cash released from ESCO and Exelera is quickly absorbed into a new round of capital deployment.