Transdev (formerly Veolia Transdev) has signed a contract for the sale of its holdings in the Jerusalem light rail. In addition, ‘Veolia Environnement’ has agreed to sell its water, waste and energy activities in Israel to Oaktree Capital Fund. Both deals require approval from the Israeli authorities and the completion of ownership transactions. At the moment, this has not been achieved.
Attempts to Sell Connex Jerusalem and CityPass
On the 2 September 2014, Veolia Transdev signed a contract with the Israeli shareholders in the CityPass consortium: The Ashtrom Group, IIF (Israel Infrastructure Fund) and Harel Insurance – for the sale of Connex Jerusalem and Veolia Transdev’s remaining 5% share in CityPass itself. If this deal will be approved, Connex Jerusalem will be merged into CityPass and Veolia will no longer have any holdings in the controversial Jerusalem light rail project. (For more information on Veolia’s operations in the occupied Palestinian Territory, see the company’s webpage on Who Profits’ database).
According to a report sent by Ashtrom – one of the potential buyers – to the Tel Aviv Stock Exchange, the sale will only be executed if three bodies will give their consent. These include: The Israeli Antitrust Authority, the Israeli government and the Israeli banks, who finance the Jerusalem light rail project.
The Israeli Antitrust Authority has approved the potential merge of CityPass and Connex Jerusalem on the 7 October 2014, but the two additional approvals are still pending.
In an article published in the Israeli financial newspaper – The Marker (in Hebrew) – it was claimed that the Israeli Ministry of Transportation is expected to remove its objection to the sale. In the past, the Ministry has blocked Veolia’s attempts to sell its holdings in the light rail to the local Egged Company:
“Now the state’s position might change. According to the state’s demands, the international operator must remain in the project for at least five years, but Transdev is trying to shorten this period through different sale deal proposals’. It looks that this is another attempt, but a more serious one. […] In Initial talks with the shareholders [Israeli shareholders in CityPass], they were told that the state will be satisfied with directors and other seniors with international experience and that there is no need for the company itself to hold this experience. Sources in CityPass claimed that the company already has three years of experience operating the train and that in any case Transdev will remain as a consultant to the project. If the state will approve the sale however, it [the state] might expose itself to legal suits by Egged on the grounds of discrimination.”
Apart from this article, there has been no additional evidence of a shift in the Ministry of Transportation’s requirement that the operator of the light rail should have international experience.
Furthermore, according to the Israeli Companies Registrar, there have been no changes in the ownership of Connex Jerusalem and CityPass. Therefore, Veolia Environnement, through its subsidiary Veolia Transdev, officially continues to hold a 5% share in CityPass and 100% of Connex Jerusalem.
The Oaktree Deal – Ownership Transaction is delayed
In July 2014, Veolia agreed to sell its water, waste and energy activities in Israel to an American fund, ‘Oaktree Capital Management LP’ for a total of $341 million. The sale includes the company’s activities in the Tovlan landfill in the occupied Jordan Valley and in the Ayalon sewage treatment institute, which collects sewage from the illegal settlement of Modi’in Illit.
Back in September 2014, Veolia’s representative set a timetable and described the necessary terms for the completion of the sale. In a response to Middle East Monitor, Paris-based Veolia spokesperson, Sandrine Guendoul, confirmed that “divestment should be closed and completed by the end of the year”, since an approval is required “from Israel’s competition authorities”.
Since then, the Israeli Antitrust Authority authorized the sale to Oaktree, but the ownership transaction has not taken place yet. According to the Israeli Companies Registrar, there have been no changes in the ownership of Veolia Environmental Services Israel, Veolia Water Services Israel, Dalkia Israel and SARP Industrial Waste Israel.
This deal is likely to be completed with the ownership officially changing, however until now Veolia Environnement Services Israel and its subsidiaries are still officially owned by Veolia Environnement. If and when any of these deals will be completed, Who Profits will update the company profile on its database accordingly.
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