TEL AVIV Japan's ORIX Corp (8591.T) will buy a 22.1 percent stake in Israeli geothermal energy producer Ormat Technologies Inc (ORA.N) for $627 million from a group led by the FIMI private equity fund, the companies said on Thursday.
ORIX will pay $57 for each of the 11 million shares it is buying. The deal is expected to close in the third quarter.
Gillon Beck, Ormat's chairman and a senior partner in FIMI, said the collaboration with ORIX is expected to expand Ormat's growth opportunities, particularly in Asia.
"We believe that the geothermal sector has the potential to become an increasingly large component of the world’s overall energy mix," said Yuichi Nishigori, head of energy and eco services business headquarters at ORIX. "Given Ormat’s technological leadership and increasingly global portfolio of operations, we believe the company is well positioned to help lead this expansion."
Ormat will have exclusive rights to develop, own, operate and provide equipment for ORIX geothermal energy projects in markets outside of Japan and will have certain rights to serve as technical partner and co-invest in ORIX geothermal energy projects in Japan. ORIX will assist Ormat in obtaining project financing from leading providers of renewable energy debt financing.
ORIX will have the right to appoint three directors to an expanded nine-person Ormat board and propose a fourth person to be mutually agreed by Ormat and ORIX.
(Reporting by Tova Cohen; Editing by Steven Scheer)