In this comprehensive review, S. Horowitz partners Benny Sheffer and Lance Blumenthal examine Israel’s energy and infrastructure sector as it navigates a period of transition. While large cross-border acquisitions have slowed in the wake of regional geopolitical pressures, the market remains active — driven by major project financing, renewable energy expansion, and rising demand from data centres and AI infrastructure. Local lenders and developers continue to invest with confidence, and regulatory reforms are opening new doors for private-sector participation. For investors, legal counsel and deal teams, understanding the current landscape is essential.
Over the past year, energy and infrastructure M&A activity in Israel has slowed compared to the previous 12 months. The market is still active, but the focus has shifted. Instead of headline acquisitions by foreign investors, most activity has been in project financing and upgrades to existing assets.
A clear example is Dalia Energy’s major financing agreement for ILS5.3 billion (USD1.5 billion) from Bank Hapoalim for the construction of a new 850 MW power plant at Eshkol. Deals like this show that local investors and lenders remain confident in building new capacity, even while large international buyers currently appear more cautious.
Observable Changes
Comparison to the Global Position
If inflation stays stable and regional risks ease, foreign strategic buyers are likely to re-enter the market. Growth in renewables, power storage, grid improvements and energy supply for data centres is expected to generate new opportunities. Accordingly, Israel is definitely not in a downturn. More correctly, it is in a holding pattern for increased major M&A deals with the market being well positioned for a profitable rebound.
Key Trends
Natural gas
Offshore natural gas remains central to Israel’s energy strategy. Major expansion projects and new export arrangements have reinforced Israel’s role as a regional supplier, for example, an export deal with Egypt (130 billion cubic metres over 15 years). At the same time, temporary shutdowns during the Iranian attacks reminded investors and developers of the need for strong risk planning and system resilience.
Energy storage
Large-scale storage projects have moved from concept to reality. National tenders have awarded significant new capacity, for example, an award to Enlight to deploy large-scale energy storage systems designed to integrate more renewable energy into the grid with total investments estimated at ILS3 billion (USD840 million), thus helping to support the integration of more solar power and reduce pressure on the grid at peak demand times.
Gradual market liberalisation
Electricity market reforms continue to expand consumer choice and enable more private-sector participation. Regulatory updates around tariffs, rooftop solar and private supply agreements mean that businesses must now pay closer attention to pricing structures and negotiation opportunities, as more competitors become suppliers.
Rising demand from data centres and AI growth
The rapid expansion of digital infrastructure and artificial intelligence has put new pressure on electricity planning. Developers and regulators are accelerating work on grid upgrades, flexible capacity and backup solutions to keep pace.
Delays in transport megaprojects
Major urban rail initiatives, including the Tel Aviv Light Rail and Metro projects, have encountered timeline extensions and cost challenges. While all projects remain ongoing and reflect progress, international contractors and financiers have been compelled to reassess risk allocation and delivery models for mega-projects.
Supply chain disruptions
Conflicts in the region and disruptions to shipping through the Red Sea had the effect of increasing costs and delivery times for imported materials. For a period of several months, contractors had to embed explicit protections in project contracts and make accommodations in their budgeting strategies.
Changes in the Business Approach
ESG and climate commitments
Companies continue to align their development pipelines with Israel’s renewable energy goals, including the 2030 emissions-reduction target of 30%. While the regulatory framework for ESG is still developing, international partners increasingly expect climate-aligned standards in project finance and reporting.
A climate bill has made some progress in the Knesset, though it has not yet been fully enacted. In the interim, projects are still framed against the Paris Agreement narratives and storage, grid resilience and gas peaks are preferred when their environmental impact is far less risky.
Risk and flexibility
Force majeure, price adjustment and logistics provisions have become significantly more detailed in new contracts. Developers are also pursuing storage-backed renewable projects and bilateral power agreements to help manage exposure to market volatility, especially since the Israeli government has introduced new provisions that authorise bilateral PPAs between independent power producers and final clients.
Gas and storage in the near term
Investors are directing capital to assets that strengthen reliability: natural gas expansions, hybrid renewable solutions and grid upgrades. Longer-dated transport and interconnection projects remain part of strategic planning but are more sensitive to policy and cost risks.
Looking Ahead
Israel is continuing to balance climate commitments with energy security and unlocking private investment while managing cost and geopolitical pressures.
Despite the uncertainties, the market has shown strong adaptability. The combination of established gas resources, ambitious renewable goals and digital-driven demand means Israel’s energy and infrastructure sector will remain a key investment arena, provided that risk is managed properly, and project planning stays flexible.
How Investors are Entering the Market
Who are the Investors?
Israel is currently experiencing major growth in energy and infrastructure development. New power stations, solar farms, gas pipelines and regional interconnectors are being planned or built to support rising demand and improve energy security.
Natural Gas
Natural gas remains one of Israel’s primary sources of electricity. Several large projects are focused on increasing gas production and replacing old coal-fired units with modern combined-cycle gas plants, for example:
Gas infrastructure is also being developed to transport more energy to neighbouring countries. This helps Israel strengthen its position as a regional gas hub.
Solar and Battery Storage
Israel has excellent sunlight conditions, allowing for rapid expansion of solar generation facilitating developments, for example:
Infrastructure Supporting the Energy
Major national infrastructure projects support both conventional and renewable energy, for example:
These examples are ways to ensure that new solar power and flexible gas generation can be efficiently used across the country. In so doing, the phasing out of coal-based energy sources in exchange for solar and gas demonstrates Israel’s growth of renewables aggressively, while still relying on natural gas to guarantee stable power supply, making Israel a highly active market for energy M&A, project finance and construction contracting.
Israel is a practical and efficient location to establish new ventures in energy and infrastructure. Affectionately known as the “Start-Up Nation”, Israel has progressed at an incredibly fast pace towards a more resilient energy future. The government has set ambitious goals for renewable power and monumental infrastructure projects. Accordingly, entrepreneurs looking to invest in solar power, energy storage, micro-grids, infrastructure and other innovative solutions would not be found wanting for opportunities.
Incorporating locally enables companies to make use of government incentives supporting clean energy, grid development and climate-related innovation. It also ensures that investors, regulators, and commercial partners can operate within a familiar legal environment.
Although some founders later choose to form a parent company overseas for tax or global investment reasons, initial incorporation in Israel is generally straightforward: time required for registration is short, the process is digital, and no minimum share capital is required.
Choosing the Right Corporate Vehicle
Most early-stage companies in this sector begin as a private company limited by shares. This protects shareholders from personal liability, supports flexible governance arrangements, and is widely accepted by both domestic and foreign investors.
As a company’s ambitions expand, for example, when it intends to own large renewable projects or raise substantial finance, alternative structures may be needed. If the business aims for a stock exchange listing or major institutional investment, converting to a public company becomes relevant. For developers building specific assets like solar facilities, energy storage systems, or infrastructure concessions, establishing a separate special-purpose company for each project helps limit risks and satisfy lender requirements. Limited partnerships are also used, though they are less common for technology-driven start-ups.
Securing Initial Investment
At the early stage, funding usually comes from a combination of private investors and public support programmes. Angel investors, family offices and individuals with industry experience are often the first backers. Alongside this private capital, the Israel Innovation Authority and other government-supported initiatives may provide grants or pilot programme support, which is particularly important in regulated markets such as electricity and infrastructure.
These early investments are first documented in a short-term sheet recording the main commercial terms. Once agreed, the parties sign more detailed agreements (typically a shareholders’ agreement and a subscription agreement) which set out the as-of-yet undefined provisions with an emphasis on founder responsibilities and investor protections.
Scaling Through Venture Capital
When the business demonstrates market readiness or global potential, venture capital becomes more significant. Funds based in Israel as well as international investors are active in areas including renewable-energy technologies, energy storage, advanced power-grid tools and infrastructure solutions.
As funding rounds grow, companies frequently restructure operations to suit investor and lender expectations. For example, they may create subsidiaries dedicated to individual infrastructure assets so that financing and licensing can be managed more efficiently.
Legal Documentation and Governance Practices
The contractual structure used in Israeli venture financing follows widely recognised international practice. Many documents are adapted from models used in major global markets, ensuring that rights and obligations are clear and that investors receive familiar protections. These typically include liquidation preferences, anti-dilution rights, director appointments and decision-making controls, as well as vesting of founder equity to support long-term commitment.
The objective is to maintain a balance that protects investment while allowing the company to operate effectively within a regulated and technically complex sector.
Structural Adjustments as the Business Grows
As companies move from early-stage development to substantial project execution, their corporate frameworks are likely to evolve. A transition to public-company status may be considered to access the capital markets. New subsidiaries may be set up to isolate regulatory and financial risks for each project. For companies raising funds globally or scaling operations outside Israel, the creation of a foreign holding company may also be considered.
These changes are generally timed to align with new financing requirements, participation in government tenders or large-scale infrastructure commitments.
In Israel, companies in energy, infrastructure or related technologies most often see liquidity through:
Considerations for Founders and Investors
Timing
Investment documents
Valuation and exit terms
Regulatory and licensing
Tax and cross‐border issues
Spin-offs are not common in Israel’s energy and infrastructure market. These deals can be expensive and legally complex, and they may involve many regulatory approvals. Still, companies sometimes use spin-offs when they want to change strategy or focus on core activities.
In Israel, major energy and infrastructure groups are more likely to restructure by selling assets, forming joint ventures or attracting new investors into specific projects. That said, spin-offs do occur when there are strong business reasons.
Common reasons to consider a spin-off in Israel include:
Israeli spin-offs are usually planned so that they do not create unexpected tax liabilities. Israel’s tax rules allow for tax-neutral reorganisations if certain conditions are met. These rules are mainly found in the Income Tax Ordinance, which deals with company splits and asset transfers.
To qualify for tax relief, the transaction must follow strict requirements, such as:
If these conditions are not met, the spin-off could trigger taxes for both the company and its shareholders.
A spin-off can be followed by a merger or sale in Israel, but this may make the completion thereof more complicated. Regulators are likely to scrutinise the spin-off in order to ensure that the separation was not done only to avoid taxes.
In order to avoid unnecessary scrutiny in such circumstances:
Timing is of importance because if the merger or sale happens too soon after the spin-off, tax relief may be denied. Therefore, before completing a spin-off, parties would be advised to consult the Israel Tax Authority and request a confirmation that the planned structure qualifies for tax relief. This is usually done by requesting a pre-ruling which will serve as a binding confirmation on how the tax law will apply) and assurances that anti-avoidance rules (ie, suspecting that the spin-off was done for the incorrect reasons) will not apply.
The ruling process can take several weeks or longer, depending on the complexity of the deal.
Buying shares in a publicly listed Israeli company before launching a takeover bid can sometimes provide strategic benefits, such as:
However, bidders must consider the following.
Owing to the presence of these issues, many buyers prefer to avoid stake-building before the formal offer.
Israel does not have a mandatory offer. Instead, there is the special tender offer rule.
If the buyer already has more than 50%, no special tender offer is required.
Public company acquisitions in Israel are primarily carried out through:
Friendly deals are far more common than hostile takeovers which may be more prevalent in other jurisdictions.
Offers may be made up of:
If the bidder bought shares in recent months at a higher price, that price may set the minimum price for the offer. Cash is more common in Israel, especially in regulated industries like energy and infrastructure.
Contingent payments (such as those based on project approvals or litigation outcomes) are possible but less common.
Typical conditions for takeovers include:
It is important to ensure that conditions are not vague or fully under the bidder’s control.
It is customary in Israel to enter into a transaction agreement in friendly public takeovers, such as mergers or recommended tender offers. These agreements focus on practical co-operation where the target assists the bidder with due diligence, prepares regulatory filings, provides required information, and keeps the business running normally until completion. The board typically undertakes to recommend the transaction to shareholders, but this promise is always subject to its fiduciary duties. Practically, that means that the board must consider a better offer if one appears.
The scope of commitments that a public target may take on is intentionally limited, because Israeli law places strong emphasis on minority shareholder protection. Measures that would improperly block competing bids are generally unfavourable and may be challenged. Break fees can be used, but they must be modest (commonly below 1% of deal value) and proportionate so they do not deter alternative proposals. Rights for the bidder to match a superior offer are sometimes included, but even those must allow the board flexibility if circumstances change.
Regarding representations and warranties, Israeli public companies typically provide minimal and essential assurances. These normally deal with main issues such as due incorporation and authority, compliance with securities reporting obligations, and accuracy of public disclosures. In regulated infrastructure sectors such as energy, additional statements relating to licences and regulatory approvals may also be included. However, broad commercial warranties, future performance guarantees, and indemnities which are more common in private M&A, are usually not given by a public target, because its shareholders are not acting as traditional sellers and cannot fairly bear future liabilities. Instead, bidders rely primarily on their own due diligence, the public reporting regime and closing conditions tied to regulatory approvals or material changes.
In Israel, tender offers usually require a minimum level of shareholder acceptance to allow for the bidder to actually gain control in accordance with the Israeli Companies Law. Key legal thresholds are 25% and 45% of the voting rights, which trigger special tender offer rules, and more than 90%, which triggers a full tender offer aimed at acquiring all shares.
A special tender offer must be approved by a majority of shareholders who are not personally interested in the deal, while a full tender offer normally succeeds if very few shares remain outside the offer (typically less than 5%, or less than 2% in some cases). These rules are designed to protect minority shareholders, prevent creeping takeovers, and ensure transparency when control of a public company changes hands.
If a bidder reaches 95% tender acceptance, it can force the remaining 5% to sell their shares (“squeeze-out”) at the offer price.
If the 95% level is not reached, the minority shareholders stay on and the company continues to operate as a public company unless de-listing rules are satisfied.
In Israel, there is no formal “certain funds” requirement like in some other jurisdictions, but the bidder must demonstrate that it has reliable and sufficient financing before launching a tender offer or merger. Practically, this means financing arrangements are made at announcement, and the buyer (not the financing banks) is the party making the offer.
Generally speaking, a takeover offer cannot be conditional solely on obtaining financing, as this would create uncertainty and risk to minority shareholders. That said, however, closing can be subject to conditions including, inter alia, regulatory approvals and no material adverse change. Buyers therefore secure committed financing upfront to avoid the offer being blocked or viewed as non-credible by the Israel Securities Authority or the target board.
In Israel, a target company can agree to limited deal protections, such as giving the bidder access to information, agreeing to keep running the business normally, and in some cases a reasonable no-shop or matching right so the bidder can respond to a better offer. Break-up fees are allowed only if they are limited and not harmful to minority shareholders, while reverse break fees (where the bidder pays) are more common. Strong defensive measures like poison pills or force-the-vote requirements are generally not used and may be challenged under Israeli law because these measures, while common in other jurisdictions, are viewed as inconsistent with directors’ duties to protect all shareholders, especially minorities.
In Israel, there are no domination or profit-sharing arrangements like in some other jurisdictions. Governance rights depend on the percentage of voting rights obtained:
Any additional governance rights would normally come through negotiated agreements or board appointments and may require regulatory approvals in specific sectors which include energy and infrastructure.
In Israel, it is common for a bidder to seek irrevocable commitments from major shareholders and directors to support or tender into the transaction, especially in friendly deals.
These undertakings are usually limited and often include an “out” that allows the shareholder to withdraw the commitment if a better offer comes about, consistent with fiduciary duties and minority shareholder protections.
To demonstrate by way of example, if a principal shareholder holding 18% of the target company signs an agreement with the bidder in which it promises to accept the tender offer for all their shares, not to sell those shares to anyone else before the offer closes and to co-operate with providing required information etc, this commitment does not preclude an “out” that would allow the shareholder to withdraw the commitment if a better offer is made that is at least x% higher in value, or the target board changes its recommendation after concluding it must do so to fulfil its legal duties.
The tender offer documents must be filed with the ISA and the Tel Aviv Stock Exchange (TASE), but formal pre-approval of the offer price or terms is generally not required. The ISA reviews the disclosure to ensure, inter alia, accuracy and fairness and may request clarifications or amendments.
The timing depends on the complexity of the transaction, but the process usually takes a few weeks. If the offer includes share consideration, a prospectus must be approved by the ISA, which can take longer.
The tender offer timeline is set by the Securities Regulations (usually 21–35 days), rather than by the regulator’s discretion. If a competing offer is launched, the timetable may be extended to allow shareholders a fair opportunity to consider both offers, and the first bidder generally has the discretion to adjust its terms or withdraw its offer.
A final deadline is usually included in the merger or takeover agreement to avoid prolonged uncertainty. By that date, all required conditions (such as regulatory approvals) must be completed. If the deal is not finished by the long-stop date, either party can usually walk away without penalty.
A tender offer can be extended if it cannot be completed because regulatory approvals are still pending, but the extension must comply with the statutory timelines (see 4.13 Securities Regulator’s or Stock Exchange Process) and be clearly disclosed to the market. The bidder will generally keep the offer open until approvals are received, provided that the delay is for legitimate regulatory reasons. The Israel Securities Authority may require updated disclosures if the process becomes lengthy.
It is common practice to begin the regulatory approval process after the deal is announced but before the offer closes, and some approvals often progress before the formal launch of the tender period. In sensitive sectors like energy and infrastructure which may require approvals from various authorities, bidders usually engage regulators early to avoid timing issues and reduce execution risk.
Privately held companies in Israel are most commonly acquired through share purchases, where buyers acquire shares directly from existing shareholders, or through asset purchases when the buyer wants selected assets without assuming wider liabilities.
Statutory mergers under the Israeli Companies Law are also used when tax or operational efficiencies justify a more formal combination. In such circumstances, extensive due diligence across financial, legal, employment, tax, IP and data compliance areas, securing any required regulatory approvals (such as from the Israel Competition Authority or sector-specific regulators), and complying with shareholder rights in the Articles of Association and shareholders’ agreements, is paramount.
Employee rights are a major focus owing to strict Israeli labour law around continuity of employment, accrued benefits, and pension/severance liabilities. There is usually a need for tax restructuring, and in more complex cases, buyers may seek advance rulings from the Israeli Tax Authority.
Clearly worded representations, warranties and indemnity protections are vital to mitigate risks following the closing.
Establishing and operating a new company in the energy and infrastructure sector in Israel is subject to specific regulations.
Regulatory Bodies
Depending on the nature of the project, the main regulators or ministries that will need to be engaged are likely to include the following:
Timeframes for Permits and Approvals
While there is no single standard timeframe that applies across every type of new company in the energy and infrastructure sectors, industry norms and practical experience indicates as follows.
For M&A transactions in the energy and infrastructure sectors in Israel, the primary securities market regulator is the ISA.
That said, there are additional regulatory bodies to be aware of including, inter alia:
Israel does not have a single foreign investment statute with mandatory notification requirements that pertains to all sectors. Instead, a national security review is carried out based on sector-specific and risk bases. The government has established the Advisory Committee for Evaluating National Security Aspects of Foreign Investments, which co-ordinates screening of foreign investors in transactions involving significant national infrastructure as well as in other sensitive industries.
Where the target operates in a regulated sector of national importance (of which most energy and infrastructure projects form a part), prior approval from the competent ministry or regulator may be required as a condition to closing. In those situations, the review is effectively suspensory until clearance is granted, and non-compliance can result in the transaction, licensing or other actions being barred.
National Security Review
Israel does not operate a single, comprehensive foreign investment screening statute. Instead, national security concerns are addressed through a ministerial review mechanism. The Advisory Committee for Evaluating National Security Aspects of Foreign Investments assesses proposed investments in critical infrastructure and specific technology sectors, regardless of whether the acquirer is foreign or domestic.
Review may be required in the following circumstances, inter alia:
Sector-specific regulatory frameworks can require authorisation prior to closing and allow the government to block, unwind or impose conditions on transactions that create security risks. Public interest considerations may also arise in cases involving state-owned or formerly state-owned enterprises governed by the Government Companies Law.
Foreign investors in the energy and infrastructure sectors should consult with the relevant regulator or ministry to confirm whether national security review applies and to incorporate any conditions into their transaction documents.
Export Control
Israel maintains an established export control regime and maintains commitments to various multilateral control arrangements, including the Wassenaar Arrangement, the Missile Technology Control Regime, and the Australia Group. Export controls apply to defence items, dual-use technologies and cybersecurity products, as well as certain chemicals, biological agents and other controlled materials.
Relevant regulatory authorities include, inter alia:
Exporting controlled items without a valid licence can constitute a criminal offence and expose companies to civil and regulatory penalties. Brokering, technical assistance and intangible transfers of controlled technology (including software and data) may also require licensing. Export controls frequently intersect with sanctions regimes and may require co-ordinated compliance for businesses operating in sensitive jurisdictions.
Merger control in Israel is governed by the Economic Competition Law, 1988, and administered by the ICA. Unlike other jurisdictions which have a voluntary regime, Israel has a mandatory pre-closing notification and approval system. A transaction may not be completed until merger approval is obtained if any of the statutory thresholds are met.
Approval must be obtained where one or more of the following apply:
The ICA is empowered to block, conditionally approve, or impose remedies on transactions that may significantly harm competition. In certain cases, the ICA may also review arrangements that may fall outside the defined thresholds where competition concerns are identified.
Parties in regulated sectors (of which energy and infrastructure form a part) may also be subject to additional approvals from sector-specific regulators or ministries, particularly where the transaction affects critical infrastructure or market structure. Albeit not a requirement, it is common for parties to consult with the ICA at an early stage to refine market definitions and assess potential competition concerns.
Israel has a highly protective labour law system with strong statutory rights for employees and an established role for trade unions, particularly in large enterprises and historically state-owned infrastructure companies. Collective bargaining agreements may apply at the sectoral level and, where in force, can significantly influence terms of employment.
Additionally, Israeli law requires that when a business is transferred as a going concern, employees generally continue their employment with the acquiring entity without interruption, and their accrued rights (such as seniority-based entitlements, pension rights and severance pay) are preserved. Changes to terms and conditions following the transfer are subject to statutory protections and, where a collective bargaining agreement applies, to negotiations with the relevant union.
Where unionised workplaces are involved (in respect of which the energy, infrastructure and transport sectors are indeed relevant), acquiring companies may need to conduct consultations with employee representatives before implementing structural or operational changes.
Changes in the workforce, including dismissals or harmonisation of employment terms, must comply with statutory procedures and good faith bargaining requirements, and may require engagement with government agencies such as the Commissioner of Labour Relations.
Israel does not impose currency control restrictions on M&A transactions and does not require central bank approval for foreign exchange activities. Generally speaking, funds may be freely transferred into and out of Israel, subject to compliance with anti-money laundering regulations, tax and sanctions regulations administered through the Bank of Israel and other regulatory authorities (if applicable in accordance with the specific case).
In Sun-Flower (et al) v Kingdom of Spain (Tel-Aviv District Court, 25 August/1 September 2025) the court refused to enforce an award issued by the International Centre for Settlement of Investment Disputes (ICSID) on the basis of the Energy Charter Treaty against Spain, citing (among other things) the lack of a sufficient Israeli nexus.
This appears to be the first Israeli ruling on ICSID award enforcement, and it established that a better-suited location (one that has a stronger legal connection) should be utilised for enforcing energy awards unless attachable assets or stronger local connections exist. As a result of the decision, it is precedent now that winning an ICSID case does not guarantee that the successful party can collect money in Israel.
For relevant parties seeking to engage Israeli energy or infrastructure M&A deals, the ruling affects judgment enforcement risk and forum strategy in cross-border deals.
Renewable Energy – Significant Recent Developments
The following constitutes non-exhaustive examples.
Political and Regulatory Objectives and Support for Carbon-Emissions Reduction
Incentive Schemes
Conventional Energy Sources – Political and Regulatory Developments
The scope of due diligence in public company acquisitions is generally more limited than in private deals and is primarily confirmatory in nature. Practically, it verifies information already disclosed through the company’s public filings. Public companies are subject to the Israeli Securities Law, 1968, and the Securities Regulations (Periodic and Immediate Reports), 1970, which require extensive disclosure to the ISA and the TASE. Consequently, bidders rely mainly on these public disclosures for their review.
In contrast, due diligence in private company acquisitions is generally broader and may include reviews of corporate, contractual, financial, regulatory and environmental matters. In the energy and infrastructure sector, bidders commonly focus on project risks including concession rights, government approvals, environmental permits, grid-connection arrangements, and financing documentation.
There is no statutory obligation for a public company to provide identical information to all potential bidders in a takeover or acquisition context. However, Israeli securities and corporate governance rules impose practical and fiduciary limits on selective disclosure and board discretion during due diligence.
Under the Israeli Securities Law, 1968, a company must ensure that any material, non-public information (“inside information”) is not disclosed selectively. If such information is provided to one bidder, the company must immediately disclose it publicly through a TASE filing to avoid violating insider trading prohibitions.
Therefore, a company may provide non-material or confirmatory information selectively to one bidder under confidentiality but if the information could influence the price of the company’s securities, in such circumstances, it must be disclosed not just to competing bidders, but also to all investors.
In practice, Israeli public companies tend to limit the scope of due diligence and confine it to data already available in public reports or to information that is clearly non-material.
The board of directors has wide discretion to determine:
provided it acts in good faith and for the company’s best interests (Companies Law, 1999, Sections 11–12 and 252–254).
The board must balance the need to maximise shareholder value (by facilitating a competitive bidding process) against the risks of leaking sensitive information or violating confidentiality obligations.
In transactions involving regulated entities (such as energy licensees, electricity producers, or infrastructure concessionaires), the board often must also consider regulatory confidentiality and Ministry of Energy or Electricity Authority restrictions.
In Israel, several legal and regulatory restrictions may limit the scope of due diligence for energy and infrastructure companies including, inter alia, the following.
In Israel, a bid needs to be made public when it reaches a stage where it could materially affect investors’ decisions or the market price of the company’s shares.
The requirement to make a bid public arises under the Israeli Securities Law, 1968, the Companies Regulations (Tender Offer), 2000 and the TASE Rules. This legislation aims to ensure transparency and protect investors by requiring disclosure of material information. Specific rules apply to the disclosures including, inter alia, the following.
The issuance of securities in connection with a takeover or merger may trigger prospectus requirements under the Israeli Securities Law, 1968, unless a statutory exemption applies.
When a public company offers its shares or other securities to the public, it must file a prospectus approved by the ISA. In a stock-for-stock acquisition (where the consideration consists of the bidder’s shares), this would generally be considered a public offer unless the transaction qualifies for an exemption.
Several exemptions from the prospectus requirement are commonly used in takeover or merger transactions:
In practice, most Israeli mergers and acquisitions involving public companies are structured either as a court-approved merger or a statutory tender offer, both of which typically fall within these exemptions. Therefore, a prospectus is rarely required, provided no separate public offering or fundraising accompanies the transaction.
The ISA reviews whether the transaction structure properly relies on an exemption and may require a simplified report or disclosure document (such as a merger report or immediate report) to ensure that investors receive sufficient information.
While there is no legal requirement that a bidder’s shares be listed on a specified exchange, either in Israel or abroad, in order to proceed with a takeover, merger or share-for-share acquisition, the listing status of the bidder’s shares affects the disclosure obligations, regulatory review and the form of consideration that can be offered.
Bidders are required to provide financial statements in tender offer or merger disclosures that demonstrate financial capacity and allow shareholders to assess the consideration offered. Financials must be prepared under IFRS (or US GAAP for foreign issuers) and audited. Full pro forma statements are not mandatory unless the transaction significantly changes the bidder’s financial structure or results in a new listed entity.
Bidders are required to provide sufficient financial disclosure to allow shareholders and the market to assess the bidder’s financial condition and the fairness of the offer but the formality and extent of the required financial statements depend on the type of transaction (cash versus stock-for-stock) and the listing status of the bidder. Accordingly, transaction documents themselves are not always required to be filed in full, but summaries and key terms must be disclosed in tender offer reports, merger filings or related-party transaction notices. The ISA may request the full text where necessary for investor protection or regulatory review.
Full filing is common in instances involving related-party transactions and public mergers, while confidentiality protections can be applied to sensitive information. The ISA may permit the redaction of commercially sensitive information (such as pricing formulas or trade secrets) upon request, provided the omission does not mislead investors. Sensitive appendices (like financing schedules or technical contracts) are sometimes filed in camera with the ISA.
The duties of directors in Israel are mainly set out in accordance with the provisions of the Companies Law, 5759-1999, and related case law. The principal statutory duties include:
Unlike other jurisdictions, the Israeli Companies Law expressly provides that directors owe their duties to the company, not to individual shareholders, creditors or employees. However, directors must also consider the company’s long-term interests, the fair treatment of shareholders and the protection of minority shareholders as enshrined in Chapter 5 of the Companies Law.
It is relatively common for boards to establish ad hoc committees when considering related-party transactions, mergers or control changes, particularly where conflicts of interest may arise.
In order to ensure that no conflict of interest occurs, these committees in public companies often co-ordinate with external legal and financial advisers to ensure that the board’s approval process complies with the Israel Securities Authority and Tel Aviv Stock Exchange disclosure standards.
In M&A transactions, the board of directors bears the primary responsibility for overseeing and approving the process. This means that, inter alia:
Shareholder litigation in Israel, while not frequent, is possible through derivative actions and class actions under the Companies Law and the Class Actions Law, 2006, especially where directors are alleged to have breached their duties of loyalty or care. To that end, buyers should be aware of the following when acquiring a company that may be exposed to shareholder, derivative or class action litigation.
Israeli boards regularly seek independent external advice when considering significant corporate actions such as mergers, acquisitions, or related-party transactions. Common types of advice include:
While the Israeli Companies Law does not require a fairness opinion in all cases, the Israel Securities Authority and the Tel Aviv Stock Exchange generally expect public company boards to rely on a competent, independent evaluation when approving material transactions affecting shareholder value.
For investors, there is a clear message that deal structures, risk allocation and regulatory navigation have become more important than ever. Understanding how the war, politics, regulation and financing conditions intersect with specific projects is now central to any transaction. The main themes and concomitantly, pressure points, noticeable in Israeli infrastructure M&A constitute the content hereunder.
War, Politics and Capital Flow
The 7 October 2023 attacks and the prolonged Gaza conflict have had a severe humanitarian and economic impact in the region, including large-scale destruction of Israeli homes and infrastructure, necessitating major reconstruction needs. Israel has also seen slower growth, higher security-related spending and a more challenging political environment, including internal debate over judicial reforms and the balance of powers.
Despite this, Israel’s broader capital markets and high-tech economy have shown notable resilience. Energy transition infrastructure tenders remain active, which indirectly supports infrastructure sponsors and lenders by maintaining overall investor confidence in the jurisdiction. Regional sovereign wealth funds and government-related entities, particularly from the Gulf, continue to look for opportunities in renewables, digital infrastructure and logistics across the Middle East, with Israel included in many regional strategies despite political sensitivities.
For infrastructure investors, this means that where risks are properly and contractually managed and supported by strong counterparties, capital is still available even if pricing and covenants are tighter.
The Infrastructure Pipeline
Israel has a structural infrastructure gap built over decades: congestion on roads, lagging public transport, grid constraints, and pressure on water and social infrastructure. In response, the government has developed a multi-year pipeline across transport (metro, light rail, roads, ports), energy (generation, gas, storage, renewables), water (desalination, wastewater) and social assets (health, education, prisons and others).
Public-private partnership (PPP) models such as BOT have been used for more than two decades and remain central to delivery. According to recent US and World Bank sources, there are roughly 18 PPP projects operating, five under construction and 16 in evaluation or tender, with an overall value (operational and under construction) of around ILS52 billion (about USD14.5 billion). Transport and energy still dominate the headline numbers, but there is growing interest in digital, hospital and education PPPs.
From an M&A perspective, this pipeline matters in two ways. First, construction-stage projects often need equity recycling once they move closer to operation, creating secondary-market deal flow. Second, the existence of a visible pipeline encourages long-term market entry via platform deals, for example, foreign investors partnering with local developers or acquiring stakes in established sponsors.
Energy – Gas, Renewables and Storage
Energy is a vital component of Israeli infrastructure M&A. Israel has transformed itself from a gas importer to a significant regional gas exporter, owing largely to the Tamar and Leviathan fields. Production has grown rapidly over the past five years, with further expansion planned, and gas now accounts for roughly 70% of power generation.
Recent announcements underline that this is still a growth story. The Leviathan partners (including NewMed, Chevron and Ratio) have submitted plans to expand capacity from around 12 billion cubic metres (bcm) per year to potentially more than 20 bcm, backed by new long-term export contracts, including an enormous USD35 billion deal to increase gas exports to Egypt. This, in turn, supports investment in transmission, processing and cross-border infrastructure.
At the same time, the government has accelerated solar and storage deployment to meet climate commitments and relieve grid constraints. Earlier tenders have awarded hundreds of megawatts of solar capacity, and in 2024–2025 Israel has run major storage tenders, including a 1.5 GW “mega-tender” and separate awards where leading IPPs such as Enlight have secured large battery projects. Storage assets are increasingly being developed as stand-alone infrastructure businesses with long-term revenue contracts, attracting both strategic utilities and infrastructure funds.
For investors, the primary themes in Israeli energy M&A today include the following.
Transport Megaprojects
Urban transport is another major driver of deal flow and risk. Tel Aviv’s mass-transit plan envisages three light-rail lines and three metro lines; Jerusalem and secondary cities also have rail and BRT projects in design or build. These projects are typically procured as PPPs or long-term concessions, involving complex interfaces between civil works, systems, rolling stock, operations and real estate.
Significant international participation on the Tel Aviv Red and Green lines, the Haifa–Nazareth LRT and other projects has become commonplace, with global players such as Alstom and major Israeli contractors holding key roles. As projects reach financial close and construction progresses, sponsors are expected to recycle equity, giving rise to secondary M&A transactions where infrastructure funds and institutional investors purchase partial interests in concession companies.
However, the metro and other megaprojects are also politically sensitive and legally contested. Recent litigation over planning and tender awards (for example, the M1 metro line management tender) and planning disputes over the number and location of station entrances illustrate the risk that legal and regulatory processes can delay timelines and affect project economics.
Digital Infrastructure – Fibre, Towers and Data Centres
Digital infrastructure is increasingly treated as a core infrastructure asset class in Israel, with M&A activity focused on fibre networks, mobile towers and data centres. The government has actively encouraged fibre roll-out and competition, including through wholesale access rules and recent reforms to reduce wholesale fibre costs and gradually relax Bezeq’s obligation to share its network.
It is important to note that digital deals often raise specific regulatory questions on communications law, security clearances and foreign ownership, particularly where critical infrastructure is involved.
PPPs and Concessions
A large share of Israeli infrastructure M&A occurs at the level of project companies that hold PPP contracts or regulated licences. The World Bank’s benchmarking work shows that Israel has relatively developed frameworks for PPP preparation, competitive tendering and contract management, even if certain aspects (like fiscal risk assessment) can be improved.
Common transactions include the following.
From a client perspective, PPP-related M&A requires a close reading of the concession agreement, direct agreements with lenders, and any consent requirements from the state.
Financing Conditions
Global trends in infrastructure finance such as higher interest rates, more conservative bank capital, and a more significant role for institutional investors, are clearly visible in Israel. Banks remain active, as shown by large recent financings such as Bank Hapoalim’s USD1.5 billion package for Dalia Energy’s new Avshal power plant and the acquisition and expansion of the Eshkol plant. However, lenders are more selective, and covenant packages on new deals are tighter than a few years ago.
At the same time, institutional investors (pension funds, insurance companies) are increasingly willing to provide long-tenor debt or to co-invest alongside sponsors, particularly on energy and transport assets with predictable cash flows. Global trends in M&A show that companies with strong balance sheets are best placed to execute deals in this environment, and the same is true in Israel: well-capitalised sponsors and strategic investors are out-competing highly leveraged bidders.
Regulatory and Policy Themes
Regulation is a key driver of value in Israeli infrastructure, perhaps even more so in the current environment. Recent policy developments include the following.
For foreign investors, a practical takeaway is that regulatory risk is not static. Government decisions on tariffs, licensing, emissions and planning can move quickly, particularly under political and fiscal pressure. Transaction documents should therefore include clear change protections, and financial models should be considered against adverse regulatory scenarios.
War, ESG and Reputation
ESG must be considered alongside traditional financial and legal due diligence. The 7 October war has drawn intense international scrutiny of Israel’s military actions and the environmental impact of the war, with recent studies estimating that emissions from the conflict and the destruction and eventual reconstruction needs will have a very significant carbon footprint.
Risks include future changes in gas export policy, potential regional security incidents affecting offshore infrastructure, and the evolving design of electricity market rules (especially for storage and ancillary services).
For investors, the key is to combine clear commercial objectives with early, integrated advice across corporate, projects, regulatory, finance, tax and disputes. Done well, this can turn a fertile, albeit challenging, environment into a portfolio of resilient, cash-generating assets with real strategic value.
Published in
