The acquisition is part of a transaction in which the current owner of the Company, an entity related to Antin Infrastructure Partners (the "Seller"), has agreed to sell a majority interest in Vicinity (the "Acquisition") to an entity (the "Buyer") that is owned by Kenon and funds managed by Harrison Street Asset Management (together with such funds, "HSAM"). A consortium of lenders has committed debt financing, which is non-recourse to Kenon and HSAM, of up to $1.4 billion to fund a portion of the purchase price and a facility for future growth capital expenditures of the Vicinity business.

Kenon announces new investment Sep 2026

Vicinity, a leading pure-play district heating / cooling infrastructure utility platform in the United States, is the sole district heating / cooling provider in 12 major cities in the United States, including Boston and Philadelphia, delivering steam, hot water and chilled water to commercial, institutional, healthcare, higher education, residential and other customers. District heating / cooling systems are a well-established and important part of urban infrastructure across numerous cities in the United States, some of which have been operating for more than 150 years. Vicinity serves more than 700 customers across approximately 1,000 buildings, representing approximately 250 million square feet of space, through over 140 miles of underground pipe infrastructure. Vicinity's revenues are largely derived from long-term contracts (approximately 15 years weighted average tenor) with inflation-linked escalators, and fuel cost pass-throughs. Vicinity is also an early mover in offering an affordable decarbonized solution, eSteamTM, to support customers' sustainability objectives. Vicinity has a track record of growth, supported by a growing customer base and a pipeline of growth opportunities across network densification, network extensions and asset optimization, expected to be funded from operating cash flows and the capital expenditure debt facility. Vicinity had total revenues (under U.S. GAAP) of approximately $611 million in 2025, and based on unaudited management information provided by Vicinity, Vicinity's expected annualized run rate Adjusted EBITDA is over $140 million1.

The purchase price for the Acquisition is based on a total enterprise value for 100% of the Company of $2.92 billion, subject to post-closing adjustments including for closing date cash, working capital and debt.

The maximum cash obligation of Kenon in respect of the Acquisition is approximately $450 million, and Kenon has no obligation to acquire in excess of a 25% indirect interest in Vicinity. Kenon intends to fund its obligations for its share of the cash portion of the consideration for the Acquisition using cash on hand and available liquidity, and does not intend to use funds beyond its currently available cash and liquidity.

The Acquisition follows several years in which Kenon assessed a wide range of potential investments in new businesses and reflects the disciplined approach Kenon has taken throughout that period. It advances Kenon's strategy of maximizing shareholder value through a substantial investment in an established industry. The Acquisition reflects diversification of Kenon's business into an area that is distinct from the electricity generation activities of OPC Energy Ltd. and its subsidiaries. Kenon will have significant board representation and intends to be actively involved in promoting the growth and development of the business.

Kenon's partner in the Acquisition, HSAM is a global alternative investment management firm with more than $110 billion in assets under management.2 Funds managed by HSAM own, among HSAM's diversified portfolio, a 33.33% stake in CPV Renewable Power LLC, which holds the renewable energy business of CPV Group LP, which is the U.S. subsidiary of Kenon's subsidiary OPC Energy Ltd. Such investment in CPV Renewable is distinct from the Acquisition.

Kenon and HSAM have agreed to enter into a limited liability company agreement (the "LLC Agreement") which will govern their rights and obligations with respect to the Buyer, including provisions with respect to funding of the Buyer, pre-emptive rights, customary transfer restrictions and rights to trigger a sale of interests in the Buyer after a certain period, all subject to agreed terms and exclusions. The LLC Agreement also includes provisions for management of the Buyer, including the appointment of managers of the Buyer and actions which require both parties' consent. An interim agreement between Kenon and HSAM governs the rights and obligations of the parties with respect to the Acquisition between signing and the effective date of the LLC Agreement.

The Buyer has entered into an agreement with the Seller for the acquisition of Vicinity (the "Equity Purchase Agreement"). The Equity Purchase Agreement includes representations, warranties and covenants, in relation to which the Buyer has obtained representation and warranty insurance. Pursuant to the Equity Purchase Agreement, the Buyer will acquire between approximately 60% and 100% interest in the holding company of Vicinity ("Vicinity Holding Company"). The Buyer and the Seller have entered into an agreement that sets out provisions governing Vicinity Holding Company from completion of the Acquisition should the Seller retain an interest in the company, including governance rights of the parties, funding and transfer restrictions and provisions for Kenon or HSAM, at their discretion, to increase their interests in Vicinity Holding Company, subject to agreed terms and exclusions.

The Equity Purchase Agreement may be terminated prior to closing in the case of certain material breaches of representations and warranties or if closing conditions are not met within certain deadlines set forth in the agreement. The Equity Purchase Agreement provides for a termination fee payable by the Buyer to the Seller if the agreement is terminated in certain circumstances, which amount (plus certain expenses) is guaranteed by Kenon and HSAM (the "Guarantees"). Kenon's obligation under its Guarantee is limited to $40.2 million.