Egged Israel's leading transportation company, is gearing up to raise NIS 500 million

Egged, Israel's leading transportation company, is gearing up to raise NIS 500 million through a massive fundraiser. The fundraiser will involve issuing bonds that have been assigned a high AA-minus rating by S&P Maalot, indicating a strong credit profile and investor confidence in the company's stability.

This fundraising initiative marks the first major financial endeavor since Egged was acquired by Roni Biram and Gil Deutsch's Keystone. While the company had a private bond series in the past, it was discontinued long ago, and Egged has remained largely absent from the capital market due to its self-sustaining financial position.

Egged's prominence in the transportation sector is undisputed, operating 28 clusters and efficiently serving 204 million passengers across all its routes in 2022. With a workforce of 7,000 employees, including 5,100 skilled drivers, the company currently holds a significant 30% market share.

The company's robust financial position is further bolstered by subsidies received from the state for each passenger it transports. Additionally, Egged maintains a substantial NIS 1.7 billion fund designated for upgrading its fleet with new buses. A strategic partnership with the state has also been established, where the government is set to assist Egged in transitioning to electric buses while aiding in the retirement costs of the company's founding generation, whose agreements are known to be financially demanding.

Recent developments have added to Egged's growth prospects, as it secured contracts to operate bus routes not only in Jerusalem but also in the Netherlands. These new ventures are expected to drive an increase in revenues and, subsequently, boost profits. Industry experts predict that Egged will achieve an adjusted EBITDA of NIS 1 billion this year and is well on track to surpass the NIS 1 billion mark next year, reaching an adjusted EBITDA of NIS 1.1 billion.

In terms of financial projections, Egged's treasury is expected to hold a cash balance of NIS 675 million by the end of the first quarter this year. Furthermore, the company is anticipated to present a positive operating cash flow of NIS 500 million, excluding lease fees, during the same period.

With the funds raised from the issuance of bonds, Egged aims to further expand its operations, improve infrastructure, and invest in cutting-edge technologies to ensure a seamless and sustainable transportation experience for its millions of passengers. This bold move is set to solidify Egged's position as a leader in the transportation sector and pave the way for continued success in the years to come.