Sources inform "Globes" that Apax Partners is hesitating over whether cancel the acquisition of Psagot Investment House Ltd. and buy Clal Insurance Enterprises Holdings Ltd. (TASE: CLIS) instead. Apax chairwoman Zehavit Cohen will decide on the matter in the coming few weeks and by the end of September at the latest, when the initial deal with Psagot is supposed to be concluded.

Until a few weeks ago it seemed that Apax and Psagot's controlling shareholder York Capital Management would agree to postpone completing the deal by three months. But if Cohen decides to purchase control in Clal Insurance the deadline for concluding the Psagot deal will not be extended for three months, and legal commentators say that because crucial conditions would not have been met then the deal will be cancelled.

Apax understands that they do not have the practical capability to acquire both Psagot and Clal Insurance due to regulatory restrictions in the long-term savings market sector.

Thus Cohen must choose between buying Psagot from York, a deal agreed last December, or competing for the purchase of control of Clal Insurance from Nochi Dankner's IDB Holding Corp. (TASE:IDBH). Apax and IDB have been holding talks in recent weeks and today IDB announced that it has hired investment bank Goldman Sachs to handle the sale of Clal Insurance.

IDB is reportedly asking NIS 4.2 billion for a 55% stake in Clal Insurance far higher than the NIS 2.35 billion Apax must pay for a 75% stake in Psagot.

Apax is conducting an in depth examination of Clal Insurance's situation and has appointed a special team to investigate its potential for improvement, and growth capability to discover if a private equity fund like Apax can achieve double digit returns from the investment.

Published by Globes, Israel business news - www.globes-online.com - on August 4, 2010

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