The company wants to double Gaon Capital Markets’ assets managed to NIS 20 billion in order to compete.
B. Gaon Holdings Ltd. (TASE: GAON) plans to expand its financial arm, Gaon Capital Markets Ltd. Sources inform ''Globes'' that the company is considering acquiring a mid-sized investment house and merging it with Gaon Capital Markets in order to double its size to manage NIS 20 billion in assets.
Capital market sources believe that Gaon Holdings’ IPO gave the company many new opportunities and that it now has the financial wherewithal to leverage the acquisition of an investment house for several hundred million shekels. The sources believe that the anticipated consolidation in Israel’s capital market in the coming years and the huge importance of economies of scale mean that only large companies will be able to stay competitive in the financial and personal assets management market. An acquisition of an investment house will enable Gaon Capital Markets to cut its administrative, marketing and trading overhead and triple its operating profit.
In the two and a half years since Gaon Holdings acquired Gaon Capital Markets from Menorah Mivtachim Holdings Ltd. (TASE: MORA), the investment house has quadrupled its assets managed to NIS 8 billion.
Gaon Holdings said in response, “The company is reviewing a number of ways to expand the business of its financial arm. No decision has yet been made. When we decide, we’ll announce it.”
Published by Globes [online], Israel business news - www.globes.co.il - on June 27, 2007
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