"Elliot Broidy, Amir Kess, and Ron Lubash were a very tight-knit triumvirate. That's why it's necessary to replace both Kess and Lubash," said an Israeli investor in Markstone Capital Partners Group LLC today, in the wake of disclosure that chairman Broidy had resigned and reached a plea bargain in the bribing of state pension officials in the US in order to obtain investment in the company.
Another institutional investor called for a change in Markstone's management. "Maybe they should transfer management of the fund and its investments to another private equity fund?" he asked, and explained, "It isn't easy to sell the fund's investments."
Not all Israeli investors in Markstone agree about the direct link between Broidy and the company's co-managing directors Kess and Lubash. One investor said, "In my opinion, there will be no demand to replace Kess and Lubash. The arrows are currently targeting Broidy, and they have no connection with the bribes."
Nonetheless, the affair is just one more reason for Markstone's institutional investors to be angry at the company in the wake of the Prisma Investment House collapse. "In my opinion, there will be pressure to oust Kess and Lubash from the company," said an investor.
The Israeli institutional investors in Markstone who spoke to "Globes" today agree that there is no reason to give the company any more money. "I don’t believe that anyone will give the company money, even if it asks for the investors for the money they committed. I also don’t think it should be paid the management fees on the $800 million committed to the company, but only on the money it's already called," said a senior executive of an investment institution.
Former Israeli Ambassador to the UN, Dan Gillerman was named chairman of Markstone to replace Broidy. Gillerman told "Globes" today that the main thing was to ensure the continued success, improving its investments and investor confidence in it, and also to consider further investment in it.
"Globes": So in your opinion, there is room to consider Markstone II?
Gillerman: "Markstone has money which has not yet been invested. I definitely do not discount the possibility of Markstone II."
Published by Globes [online], Israel business news - www.globes-online.com - on December 6, 2009
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