Subscribe to Print Edition | Thu., November 20, 2008 Cheshvan 22, 5769 | | Israel Time: 19:54 (EST+7)
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Planned joint Leviev-Arison tender bid will be a face-off
By Avi Bar-Eli

And once it had been a beautiful comradeship. But then Ofer Kotler jumped ship as CEO of Africa Israel group company Danya Cebus, for the favors of Shari Arison's competing company Housing and Construction. And now the business relationship between the two groups seem to have soured.

A few days after the news of Kotler's resignation, Lev Leviev's Africa Israel Investments surprised Shari Arison's Housing and Construction by announcing the dissolution of the planned partnership between the two. Not just any partnership: It was one of the biggest tenders in the Israeli infrastructure sector - to build an Israel Police training center in the Beit Shemesh area. The project was estimated at $200 million. Now the two groups will bid separately.
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About four months ago, the accountant general's department at the Finance Ministry issued the performance qualifications (PQ) for participating in the tender. This is a private finance initiative (PFI) tender for the construction of a 230-dunam facility and its operation for 20 years, in return for an annual payment from the state.

Industry sources say a dispute erupted between the Housing and Construction and Africa Israel over their respective shares in the construction and operating stages of the project. Still, the announcement of the break-up of the partnership was the unilateral step taken just a few days after Kotler left.

The split between the two groups is likely to affect their future activities, as they had recently drafted understandings concerning a joint bid on the construction of the Bahadim Israel Defense Forces training base town in the Negev, whose cost is estimated at $1 billion. The two groups were likewise discussing a joint bid on the construction of a bypass road around Haifa's Krayot suburbs.

"Housing and Construction and Africa Israel have joint ventures in Israel and around the world," said an Africa Israel source, "and periodically examine new possibilities for cooperation. Africa Israel has decided to apply for the current tender alone."

"The groups currently work together on various projects and will continue to consider future joint ventures," said a Housing and Construction ministry source. "The Housing and Construction Ministry is currently preparing a bid on the tender."

In other Africa news, Clal Finance warns that that the main challenge facing the company this and next year will be execution. Africa doubled its balance-sheet assets to NIS 38.5 billion last year through NIS 11 billion in investments, the brokerage says, and now has to finish projects. Repricing won't cut it: Africa will have to divest and get cash because massive borrowing will become harder, the analyst warns.
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