The director’s board of Israeli department store chain Max Stock has approved plans to form a joint venture (JV) with Portuguese firm Fortera Properties.

The JV company will be based in Portugal and be jointly owned by Max Stock, with a 75% stake, and Fortera, which will hold the remaining 25%.

It will work towards establishing and managing a chain of Max Stock stores in Portugal and Spain.

The approval follows a memorandum of understanding (MoU) signed by the two companies in this regard.

Under the terms of the agreement, the chain of stores will initially be established in Portugal before being expanded to Spain.

Initial financing for the partnership, including establishment and operation of the JV and stores, is valued at €5m.

Max Stock will bear 87.5% of the initial financing cost, with Fortera contributing 12.5%.

The Israeli retailer will hold the right to appoint most of the directors for the JV, while Fortera will handle its managerial operations, including negotiating commercial deals and all legal and regulatory aspects.

Max Stock said that major discount players have not yet tapped the Portuguese market, while discount stores in Spain are mainly managed by private, non-chain street stores and grocery chains that sell non-food products.

The company’s CEO and director Ori Max said that Portugal’s unexplored market potential, as well as its low GDP and minimum wage, will help the company create demand in the discount retail space.

In addition, Max Stock’s knowledge of importing and supply chain management is expected to help the company expand its footprint outside Israel.

In a separate development, Max Stock has published its financial results for the second quarter (Q2) of the fiscal year 2022 (FY22).

The company’s revenue increased by 13.0% to NIS252.7m ($77.4m), while its gross profit rose by 15.8% to NIS99.2m ($30.4m).