Sources inform ''Globes'' that Coface, which owns the controlling interest in Business Data Israel (BDI) is planning to extend its activities in Israel by establishing a factoring company. This business will be unrelated to BDI. The new business will probably be launched in a few months, and will be the first foreign factoring company to operate in Israel. Sources believe that Coface will aggressively market the new factoring company in order to grab market share.
Coface's plan has taken Israel's non-bank financing market by surprise, given BDI's leadership standing in the company research market together with Dun & Bradstreet Israel Ltd. BDI provides factoring companies with information about the financial standing of potential clients. Coface sources say that the factoring activity will be handled through a subsidiary that will be completely separate from BDI.
Nevertheless, a top non-bank financing manager said that Coface would face "a substantive conflict of interests". He added, "If Coface, which owns BDI, finances companies, how will it be able to rate those companies or their competitors through a sister company of the financing company? After all, if it provides financing for a particular company with one hand, how can it sound a warning about that company on the other hand? It such a case, it will condemn the investment."
The market concerns are due, in part, that Coface's entry into the factoring market will carry weight given its financial strength. Coface operates worldwide, providing both business information and credit insurance through separate companies. The company's balance sheet total was €5.2 billion at the end of 2006.
Coface acquired BDI in early 2006.
Israel's factoring market has expanded in the past year as large financial companies entered it. Last week, Bank Hapoalim (LSE: BKHD; TASE: POLI) credit card subsidiary Isracard Ltd. was acquiring the controlling interest in Global Factoring Ltd.
Published by Globes [online], Israel business news - www.globes.co.il - on November 5, 2007
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