The sale of Clal Insurance Enterprises Holdings Ltd. (TASE: CLIS) is heating up. Sources inform ''Globes'' that the most serious contender for the company is European private equity company Permira, which is at a very advanced stage in review with Clal Insurance's parent company, IDB Holding Corp. Ltd. (TASE:IDBH), controlled by chairman Nochi Danknber.
Two other foreign companies are also in the running for Clal Insurance. BRM Capital, run by Eli Barket, and which controls DS Apex Holdings Ltd. (TASE:DSAP), had also shown interest.
A year ago, Dankner hired Goldman Sachs to advise on the sale of Clal Insurance. Goldman Sachs has since been trying to bring potential buyers to Dankner, and Permira has made the most progress.
Permira has set up a team of advisors to prepare an offer, headed by James Fraser, principal of financial services. Rothschild Banking & Trust, whose Israel country advisor is Oded Gera, is advising Permira on the Clal Insurance deal. Former Supervisor of Insurance Yadin Antebi is also advising Permira.
Gera and IDB declined to comment.
Permira has not yet given IDB a letter of intent, a critical step before due diligence. A source close to the negotiations said, "Permira is a serious company in everything that it does, including in this transaction. We'll have to see what develops in the next few days. The deal could fall through because of Dankner's high asking price."
Danker reportedly wants to sell Clal Insurance at a company value of $1.9 billion, representing a 34% premium on the company's market cap, but similar to its embedded value.
Embedded value is an accepted measure for estimating the value of insurance companies with regard to life insurance. It is an estimate of the present value of future profits in the long-term savings portfolio, spread over many years.
IDB owns 55.25% of Clal Insurance, which means that Dankner wants $1.04 billion for IDB's stake. Although elsewhere in the an insurance company's embedded value is taken as the variable reflecting its company value, Israel does not attach much significance to this factor, and all Israeli insurance companies are traded far below their embedded values.
Apax Partners is also interested in Clal Insurance. Following its acquisition of Psagot Investment House Ltd.), Apax Israel CEO Zehavit Cohen is seeing how she can acquire Clal Insurance while still complying with regulatory restrictions on assets under management. A special Apax team is thoroughly examining Clal Insurance, its competitive position in the market, capacity for growth, and threats to it. Cohen recently met Dankner on the matter.
Clal Insurance's share price rose 1.1% today to NIS 95.64, giving a market cap of NIS 5.22 billion.
Published by Globes [online], Israel business news - www.globes-online.com - on December 5, 2010
© Copyright of Globes Publisher Itonut (1983) Ltd. 2010