Shapir Sells Majority Concession Stake Ahead of Highway 6 Funding

Shapir has expanded the sale of rights in three mature concession projects, transferring 58.5% of the partnership units to Migdal, pension funds managed by Amitim and institutions from the Clal group for aggregate stated consideration of about NIS 556 million. The additional agreement preserves the NIS 9.5 million price for each 1%, providing a second external price signal without yet converting the headline amount into free cash. Shapir will retain 41.5% of the units and ownership of the general partner, while the limited partners receive the economic majority and material protection rights. At the same time, the Highway 6 North extension award puts Shapir back into a phase requiring financing, equity and guarantees for a new project. Against a market capitalization of roughly NIS 16.8 billion, gross consideration equals only about 3.3%, so the valuation impact depends on net proceeds and the return earned on their deployment. The current read is stronger than after the first agreement because Shapir increased the monetized share without cutting the unit price, but a repeatable recycling model still requires closing, accounting disclosure and a clear connection between realized capital and the next investment cycle.

The Price Held as the Sale Expanded

The May agreement covered 38.5% of the partnership for about NIS 366 million. In July, additional institutions from the Clal group agreed to acquire another 20% for NIS 190 million. Both stages use a price of NIS 9.5 million for each 1%, implying a value of about NIS 950 million for all partnership units.

The NIS 950 million is not the enterprise value of the three roads. The partnership will receive Shapir's equity interests, shareholder loans and capital notes in the project companies, while project debt remains within the dedicated vehicles. This is an external price for the portfolio of rights contributed by Shapir, not a pre-debt project valuation or an amount accruing directly to shareholders.

Nor is NIS 556 million the final cash amount. Consideration under the original agreement is reduced for certain distributions made since the end of the third quarter of 2025, accrues interest for up to 120 days and is adjusted for differences between actual and forecast project distributions. Closing still requires approvals from the public authorities awarding the projects, project lenders, the Tax Authority and the Competition Authority where required. The original agreement may be cancelled if conditions are not satisfied within 120 days, after two possible 60-day extensions. The July update does not say whether that timetable changed and does not quantify tax or transaction expenses.

Shapir Keeps Management, Not the Economic Majority

The general partner, wholly owned by Shapir, is intended to manage the partnership and its assets. The limited partners nevertheless receive vetoes, transfer protections and other rights, while holders meeting the voting threshold defined in the agreement can replace the general partner. Management remains with Shapir, but it is contractual control rather than an unrestricted economic majority.

Shapir will retain 41.5% of the partnership units. That is not a direct and uniform 41.5% interest in each road. At the end of 2025, the company owned 80% of the existing Highway 6 North concession company and 100% of Highway 16 and the Fast Lane. After those interests are contributed and 58.5% of the partnership is sold, Shapir's retained indirect economics will equal about 33.2% of the existing Highway 6 North company and 41.5% of the other two projects, before any separate economic entitlement of the general partner.

The July amendment lowered Shapir's minimum holding during the five-year lockup to 30% from 40%. Following the transaction, the company will stand 11.5 percentage points above the new floor. This creates contractual room for another disposal, but does not ensure that one will be approved or completed.

Future distributions are not automatic either. At the end of 2025, the three project companies carried aggregate loans of about NIS 3.1 billion: NIS 1.842 billion at the existing Highway 6 North concession, NIS 828 million at Highway 16 and NIS 455 million at the Fast Lane. All three complied with their covenants, but dividends remain conditional on debt-service cash reserves and coverage ratios. Shapir is selling 58.5% of those distribution rights together with 58.5% of the risk that they weaken.

Released Capital Meets an Existing Funding Need

The group ended March with NIS 361 million in cash, down from NIS 613 million at the end of 2025. First-quarter operating cash flow was negative NIS 71 million, investing consumed NIS 73 million and financing consumed NIS 108 million. In June, Shapir raised about NIS 444.9 million net through an expansion of Series D bonds for debt refinancing and ordinary operations. That fundraising is close in size to the potential net concession proceeds, leaving no basis to treat the sale as excess cash detached from the group's funding requirements.

All-in cash flexibility means cash remaining after tax and transaction costs, debt repayment, investment, guarantees and project equity contributions. The disclosed information does not support that complete bridge. It does show that the sale could replace more expensive corporate funding, reduce balance-sheet pressure or supply equity for a new project, but Shapir has not said which route it will take.

The new Highway 6 project shows why timing matters. It covers 22 kilometers and three interchanges, carries a company estimate of roughly NIS 12 billion across construction and operation, and is expected to run for 34 years after financial close. The concessionaire must complete financial close within 12 months of signing the concession agreement. Required shareholder equity, guarantees, debt pricing and coverage ratios have not been disclosed, so the portion of sale proceeds that would remain available cannot yet be determined.

Closing and Deployment Will Decide Repeatability

Shapir has achieved two material outcomes: a consistent external price for a mature concession portfolio and a sale of the majority of partnership units without surrendering management at the outset. That moves the discussion beyond a theoretical asset value. The company is nevertheless selling most of its rights to future distributions, accepting contractual governance constraints and relying on multiple approvals before cash is received.

Capital recycling becomes repeatable if both transactions close with net proceeds near the stated consideration, reporting clarifies the accounting and retained obligations, and the money either lowers funding cost or enters projects earning more than the return that was sold. Closing announcements, the use of proceeds and financial close for the new Highway 6 concession are the next three proof points. Until then, the transaction improves Shapir's financing options but does not yet prove a permanent mechanism for extracting cash from mature concessions.