FIMI sells part of Gilat stake

Following the steep rise in the share price of Gilat Satellite Networks Ltd. (Nasdaq: GILT; TASE: GILT) since the beginning of the year, the company’s largest shareholder, private equity firm FIMI Opportunity Funds, has taken advantage of the opportunity to sell part of its holding. Last week, the firm, headed by Ishay Davidi, sold Gilat shares for $58.5 million, reducing its stake in the company to 26.8%. The deal was at a price of $15 per share. Although the share price was somewhat higher a few days previously, at $21.3, the sale nevertheless yields FIMI Opportunity Funds a very respectable profit, as it bought the shares at just $4.33.

Gilat Satellite Networks, headed by Adi Sfadia, provides satellite communications solutions and services. It is traded in Tel Aviv and on Nasdaq at a market cap of $841 million, following a 153% rise in its share price so far this year (although, as mentioned, its share price is below its year-to-date peak). The rise came in the wake of a number of contracts reported by the company, but was probably mainly caused by private investors after US hedge fund ARK raised its stake. In a recent interview with “Globes”, Sfadia said, “The market is booming and investors see that the sector is hot. For Gilat too it has been a long time since so much has been happening and we are in very many fields, so if one doesn’t succeed, another certainly will. There are a lot of tenders and many opportunities.”

FIMI Opportunity Funds first invested in Gilat in 2012, and later increased its holding. Altogether, it has invested $81.3 million in buying Gilat stock, and over the years it has received dividends from the company totaling $20.3 million. The value of its remaining stake is some $226 million, so that its return on investment so far is almost three times.

The firm was meant to sell its shares in Gilat last year in the deal for the acquisition of the company by Comtech, at a lower price. The deal was ultimately cancelled after a short legal proceeding, both companies having been hit by the coronavirus pandemic, and Gilat received $70 million compensation from Comtech.

Published by Globes, Israel business news – en.globes.co.il – on February 23, 2021

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