Menara After Run Off: How Much of the Marked Value Is Actually Reachable?
Menara ended 2025 with NIS 27.96 million of equity, but only NIS 4.4 million of that sits in cash. This follow-up shows why, even without heavy solo debt, the path from marked portfolio value to cash that can actually be distributed remains long, layered, and dependent on real exits.
After the NAV Comes the Cash Test
The main article established the core point: Menara's discount is not just an argument about portfolio quality. It is an argument about whether unit holders can actually meet that value in cash. This follow-up isolates that gap. The question here is not how much the portfolio is worth on paper, but how much of the marked value at year-end 2025 can realistically make it through the full chain of payments and reach the common unit holder.
Menara has already shown, in the Reviews case, that a realization can become a real distribution. In 2024 it paid a NIS 11.85 million dividend, and the NIS 585 thousand qualifying loan that had been extended earlier was repaid. But one successful realization does not make the rest of the portfolio liquid. At the end of 2025 Menara reported NIS 27.96 million of equity, and only NIS 4.402 million of that sat in cash and cash equivalents.
To understand how much value is actually reachable, this has to be read through an all-in cash flexibility lens, meaning how much cash remains after the real uses of cash that sit ahead of a distribution. In Menara that is the only framing that matters. The issue is not recurring cash generation from an operating business. It is the path from level-3 marks to distributable cash.
| Layer | End 2025 | Why it is not the same as distributed cash |
|---|---|---|
| Total assets | NIS 29.66 million | This is the broad accounting number, not a distributable balance |
| Liabilities | NIS 1.70 million | Relatively low, but not the whole constraint |
| Partners' equity | NIS 27.96 million | Accounting equity, not cash available for distribution |
| Cash and cash equivalents | NIS 4.402 million | This is the only liquid asset already in the account |
| Unlisted investments | NIS 25.245 million | They need an exit or realization before unit holders see cash |
| 2025 operating cash flow | negative NIS 1.308 million | Even existing cash is not automatically free for distribution |
This chart sharpens the core gap. Menara is not stuck because of heavy solo debt. It is stuck because most of its equity is not liquid, and the route from that equity to the unit holder is much longer than the balance sheet makes it look.
The Marked Portfolio Is Mostly Cost Recovery
This is the most important number in the continuation. Across the four remaining holdings, cumulative direct cost stood at NIS 25.055 million at the end of 2025, while cumulative fair value stood at NIS 25.245 million. In other words, at the portfolio level, the marked value was only about NIS 190 thousand above direct cost.
That is easy to miss because the headline shows NAV and the balance sheet shows a NIS 25.2 million portfolio. But the number is saying something much more modest: if Menara were to realize the remaining holdings exactly at their current carrying values, most of the proceeds would be a return of already invested capital, not a large gain above it.
| Holding | Direct cost | Fair value at end 2025 | Gap versus cost |
|---|---|---|---|
| Pairzon | NIS 4.106 million | NIS 8.878 million | plus NIS 4.772 million |
| Matics | NIS 10.358 million | NIS 4.697 million | minus NIS 5.661 million |
| LeO | NIS 5.357 million | NIS 3.546 million | minus NIS 1.811 million |
| Sensaps | NIS 5.234 million | NIS 8.124 million | plus NIS 2.890 million |
| Total | NIS 25.055 million | NIS 25.245 million | plus NIS 0.190 million |
This chart matters more than any abstract NAV discussion. It shows that Menara's marked portfolio is no longer built on a lot of paper air above invested capital, but it is also not carrying a large safety cushion. Pairzon and Sensaps offset Matics and LeO, and the portfolio is left with almost no surplus in aggregate. That means any realization below carrying value can wipe out the small remaining cushion very quickly, while any realization above it will first have to prove that the value is real and not just conservative marking.
That is also why marked value should not be confused with reachable value. Recovering direct cost is obviously economic value for unit holders if and when it arrives. But at the end of 2025 it was not sitting in Menara's cash account. It was still trapped inside private holdings, each of which still needed its own liquidity event.
The Updated Success-Fee Mechanism Delays Leakage, but It Does Not Eliminate Distance
The Run Off plan changed the success-fee mechanism in a meaningful way. Under the updated formula, Menara first deducts the cumulative direct cost of all unrealized investments when testing whether the general partner is entitled to a fee. Unrealized markups in the remaining holdings do not count toward that hurdle. Only after that hurdle is cleared does the fee start: 20% up to a 100% profit over cumulative cost, and 30% above that level.
That is a real improvement for unit holders. It means the general partner is no longer rewarded off a theoretical uplift in one holding while other holdings have not even returned cost. Put differently, paper marks alone are no longer enough to switch on the success-fee stream.
But it would be a mistake to stop there and call the issue solved. The end-2025 balance sheet still carries a NIS 1.527 million success-fee provision. At the same time, Menara recorded NIS 727 thousand of success-fee income in 2025 because the provision declined after the target-company values fell. That is an important analytical point: Menara's equity does not move only with portfolio valuations. It also moves with the estimated fee leakage embedded in those valuations.
That creates a double gap. Accounting-wise, equity already carries part of the future leakage through the provision. Cash-wise, the fee is still not the first item in line. It only applies after a realization event, and only within the payment waterfall. So the new mechanism aligns incentives better, but it does not make the value liquid. It only means the general partner meets the cash later and under a harder test.
The Waterfall Explains Why Equity Is Not the Same as a Distribution
This is where the full answer sits. The reason the discount can persist even without heavy solo debt is that realization proceeds do not flow directly to unit holders. They move through a fixed sequence first:
| Waterfall step | What comes before the common unit holder | Why it matters |
|---|---|---|
| 1 | Reimbursement of expenses tied to the realized investment | Proceeds are not clean from the first shekel |
| 2 | Repayment of the qualifying loan or any qualifying continuation loan, if used | Bridge capital, when it exists, ranks ahead of the common unit holder |
| 3 | Success-fee payment, if the updated formula creates entitlement | Even after the change, there is still a fee layer above the realization |
| 4 | The partnership may retain cash for ongoing needs, options, and preemptive rights | Even a successful exit does not force an immediate full pass-through |
| 5 | Only after all that are 80% of the residual cash designated for unit holders | The common holder receives the residue, not the gross proceeds |
The fourth step is probably the easiest one to underestimate, and in Menara it is one of the most important. The partnership is explicitly allowed to retain cash for ongoing activity and for exercising options or preemptive rights in the existing holdings. That means even a good exit does not automatically translate into an immediate distribution. If management believes cash is needed to defend value in the rest of the portfolio, unit holders can still be waiting after a realization event.
Timing is also not immediate. Residual distributable cash is supposed to be distributed within 30 days from the publication of the half-year or annual financial statements in which the proceeds were recognized, and only subject to the distribution tests. If the solvency test is met but the profit test is not, the partnership has to go to court in order to distribute. That is not a legal footnote. It is another reason book value can be real and still trade as if it is far away.
Even Without Heavy Solo Debt, Time and Structure Can Keep the Discount Deep
The easy explanation for a holding-company discount is usually debt. In Menara that explanation is only partial. Liabilities at the end of 2025 were NIS 1.7 million, and the NIS 585 thousand qualifying loan that had been drawn in the past had already been repaid. So there is no classic parent-level leverage overhang here erasing NAV on the way to the unit holder.
But the absence of heavy debt does not solve three other frictions. The first is time. On March 26, 2026, the audit committee and the board decided to extend the Run Off plan by another three years, subject to unit-holder approval. That protects against a forced sale, but it also lengthens the wait, extends the period in which the partnership keeps carrying ongoing expenses, and leaves more room for another re-pricing along the way.
The second friction is liquidity quality. NIS 25.245 million of fair value sits in four private companies. Each of them still needs a financing round, sale, merger, or another liquidity event of its own. So the Menara unit holder is not just depending on Menara's valuation policy. They are depending on the exit market for each underlying company.
The third friction is the priority stack itself. Even when realization arrives, it still has to move through the waterfall before it reaches the common unit holder. So Menara's discount is not primarily a debt discount. It is a time discount, a payment-order discount, and a discount on the distance between level-3 value and cash in the account.
Conclusion
Menara's balance sheet looks clean, and the structure is clearly less levered than many other holding vehicles. But that is exactly what makes this case more interesting, not simpler. If there is no heavy solo debt and the discount is still deep, the market is probably saying something more specific: it is not only questioning the NAV marks. It is questioning the route those marks still have to travel before they become cash for unit holders.
Current thesis: at the end of 2025 Menara mostly holds value that still needs to become a realization event, not value that is already waiting to be distributed.
The bottom line is that the gap between marked value and reachable value here does not come from one dramatic hit. It comes from four simple facts working together: too little cash relative to book equity, a remaining portfolio marked almost exactly at cumulative cost, a success-fee mechanism that has been delayed but not removed, and a waterfall that still lets the partnership retain cash after a realization. That is enough friction to explain why the discount does not close by itself, even without a heavy solo debt burden.
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