The financial arm of IDB Holding Corp. Ltd. (TASE:IDBH), which includes Clal Insurance Enterprises Holdings Ltd. (TASE: CLIS), and Epsilon Investment House Ltd., will not be able to acquire the Gadish or Yahav provident funds, according to new restrictions published last week by Capital Market, Insurance and Savings Commissioner Yadin Antebi on maximum market share for players on the pension market . Likewise, Goldman Sachs will not be able to become a member of the group that will purchase Gadish, and Migdal Insurance (TASE: MGDL) will not be able purchase Yahav.
Antebi originally set out the guidelines in the Bachar reform proposals, which rule that no entity may hold more than NIS 53.7 billion in long-term savings assets, which amount to 15% of the market. Ministry of Finance officials stress that the restriction applies to asset purchases only, and does not affect natural growth in market share, as a result of an increase in assets of existing customers, or the joining of new ones.
Current holdings, adjusted to include acquisitions made on the market but in which ownership has not yet been transferred, reveal that Clal Insurance has exceeded its market share limit with total assets of NIS 57.5 million, unless the Ministry of Finance discounts the NIS 15 billion in assets of the Israel Electric Corporation (IEC) employees pension fund, which Clal Insurance counts as part of its own assets. Clal Insurance management and Antebi have held talks on this issue this year, but the former apparently does not intend to exempt Clal Insurance from the regulations governing asset management.
IDB will still be unable to purchase Gadish, which has NIS 21 billion in assets under management, even if the IEC pension fund is not counted among its group assets. IDB can choose between the Bank Hapoalim (LSE: BKHD; TASE: POLI) guaranteed-return funds (NIS 5.5 billion in assets), or the Yahav funds (NIS 6.9 billion).
Migdal is also close to its maximum market share. It manages NIS 27 billion in with-profit policies, and the Makefet provident fund, which has NIS 9 billion in assets. It will assume ownership of Kahal Employees Supplementary Training Fund Ltd., which has NIS 10.5 billion in assets, and it can also purchase funds managed by Bank Hapoalim, but not Bank Yahav.
Previously, the Ministry of Finance issued a ruling which stated that if several entities jointly control an asset, the entire value of the asset will be attributed to each entity individually. This applies to Migdal, for example, which jointly holds Migdal Capital Markets together with Bear Sterns, and cannot use Bear Sterns’ stake to exceed the cap on market share. Also covered by this ruling is Goldman Sachs, which is likely to take a partnership in Prisma Investment House Ltd. Following the formation of the partnership with Ayalon Holding Ltd. (TASE: AYAL), Prisma will manage NIS 33 billion in provident fund assets, therefore Goldman Sachs will not be able to join the partnership which is purchasing Gadish. Announcements to this effect have been recently appeared in the press.
Published by Globes [online], Israel business news - www.globes.co.il - on January 14, 2007
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