As the leading Tel Aviv Stock Exchange (TASE) indices soar, and with the Tel Aviv 25 Index less than 5% shy of its all-time high, the pace of sales by controlling shareholders in leading companies has picked up. An investigation by "Globes" has found that, since the beginning of 2013, controlling shareholders in TASE-listed companies have sold more than NIS 3 billion in shares.
The biggest sellers are Shlomo Eliahu, the controlling shareholder in Migdal Insurance and Financial Holdings Ltd. (TASE: MGDL) and a party at interest in Bank Leumi (TASE: LUMI) through Shlomo Eliahu Holdings Ltd., and Zadik Bino, the controlling shareholder in Paz Oil Company Ltd. (TASE:PZOL) and First International Bank of Israel (TASE: FTIN), each of whom has sold shares for more than NIS 1 billion. Half of these sales were made within 24 hours late last week.
On Wednesday, Eliahu made his largest sale to date, selling shares in Bank Leumi (after an 11% rise in the share price in the past year) for NIS 600 million. The sale was handled by Poalim IBI Underwriting and Investments Ltd. (TASE:PIU). The sale was made at a 3% discount on Bank Leumi's share price, but the moderate 1.5% drop in the share price was an indication of the demand for it. The sale follows Eliahu's share of Bank Leumi shares for NIS 470 million earlier this year.
Following the sales, Eliahu's stake in Bank Leumi has been reduced to 3%, worth NIS 550 million. He must sell these shares under the terms of his acquisition of control in Migdal. He also owns 23% of Union Bank of Israel (TASE: UNON), worth NIS 270 million, which he must also sell.
Bino has exploiting the market rally to sell shares in Paz (the share price of which has risen 22% in the past year) for NIS 300 million. Leader Capital Markets Ltd. (TASE:LDRC) handled the sale. The sale was made at NIS 570 per share, 5% less than Paz's opening price on Thursday. Paz's share price fell 6.3% on Thursday, in very heavy trading of NIS 410.4 million.
This was not Bino's first sale this year; he previously sold two blocs of Paz shares for NIS 340 million, a bloc of First International Bank shares for NIS 270 million.
A natural move in a rising market
"The sales are a natural move by parties at interest after a long market rally," says IBI research department manager Ori Licht. "Despite the rally, there is still strong demand from investment institutions for shares because they think there is upside potential. At a small discount of 3-4% on the market price, there is demand for goods, and the best example of this is latest sale by Eliahu, who expanded the sale in response to heavy demand."
Licht adds, "There has been a revival of activity by foreign investors lately, and we saw their lively participation in the sale of Bank Leumi shares, which we handled for Eliahu. Part of this can be attributed to the calm security situation vis-à-vis Syria and Iran, and part can be attributed to foreign investors seeking underperforming markets following the global rally.
Licht cautions, however, "It is necessary to distinguish between the sales. In Eliahu's case, the market knows that he must sell Bank Leumi shares because of his acquisition of Migdal, but the timing is unknown. Other controlling shareholders are already preparing for the day when they will have to choose between their financial and non-financial holdings, in line with the regulator's requirement, although there is still plenty of time.
Salkind, Arison, and Tshuva sell shares
"Some of the recent sales were made to reduce leverage," adds Licht, citing sales at Elco Holdings Ltd. (TASE: ELCO), controlled by Georg Salkind. Elco sold dormant shares and shares in subsidiaries Electra Ltd. (TASE: ELTR) and Electra Consumer Products Ltd. (TASE:ECP) for NIS 150 million, as part of his steps to increase Elco's liquidity and debts, following double-digit gains in the companies' share prices since the beginning of the year.
Shari Arison has also joined the party, through Arison Holdings Ltd., selling Bank Hapoalim (TASE: POLI) shares for NIS 250 million in June. Arison Holdings used the proceeds to repay an old debt to Bank Leumi.
Eyal Ofer has also sold bank shares to increase his liquidity: earlier this year, he sold Mizrahi Tefahot Bank (TASE:MZTF) shares for NIS 200 million, and last week, he sold three floors in Ramat Gan's Moshe Aviv Tower for NIS 60 million.
Yitzhak Thsuva is also exploiting the market rally to sell shares. In early October, Delek Group Ltd. (TASE: DLEKG) sold Delek Automotive Systems Ltd. (TASE: DLEA) shares for NIS 60 million. Since the beginning of the year, Delek Group has sold shares in the Ford and Mazda importer, which it once controlled, for over NIS 200 million. Delek Auto's share price has risen 50% since the beginning of the year.
Delek Group's sales on the TASE are dwarfed by sales of Delek US Holdings Inc. (NYSE:DK) shares for NIS 1.15 billion since January, bringing the aggregate sales of the subsidiary's shares in the past 12 months to NIS 2.6 billion.
Published by Globes [online], Israel business news - www.globes-online.com - on October 13, 2013
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