Private equity fund Apax Partners is in advanced talks to sell Psagot Investment House Ltd. to US and European investors led by Israeli businessman Ron Weissberg. Sources inform "Globes" that the parties have already signed a Memorandum of Understanding (MoU) and the buyers are conducting due diligence. The parties to the deal declined to comment.
The valuation of Psagot for the purposes of the deal is believed to be $350-400 million (NIS 1.2-1.5 billion). This is a disappointing valuation for Apax, which bought the investment house for NIS 2.5 billion.
Apax Partners Israel managing partner Zehavit Cohen has been trying to sell Psagot for some time and the asking price several years ago was NIS 3.7 billion. However, sources close to the deal believe that even at its reduced current valuation, Apax will have not made a loss on Psagot, and perhaps even a small profit, because over the years it has drawn investment dividends worth hundreds of millions of shekels.
Markets sources say that the talks between Apax and the consortium of US and European investors led by Ron Weissberg began before the coronavirus crisis, when the assets managed by Psagot totaled NIS 190 billion. But the MoU was only signed after the crisis, when the assets managed likely fell to an estimated NIS 175 billion.
Apax acquired a 76.2% controlling stake in Psagot in 2010 at a company valuation of NIS 2.7 billion. In 2015, Apax acquired the remaining 23.8% from Markstone at a company valuation of NIS 1.9 billion. Thus in total Apax paid NIS 2.5 billion for Psagot.
Completion of the deal is by no means certain and depends on due diligence and regulatory approval. Regulatory approval is likely because the Israeli regulator recently approved the acquisition of The Phoenix Holdings Ltd. (TASE: PHOE1;PHOE5) by the two foreign funds involved - Centerbridge Partners and Gallatin Point Capital.
For Weissberg, the deal would complete a circle. He bought the Gadish provident fund from Bank Hapoalim (TASE: POLI) in 2007 and then sold it to Psagot, when it was still controlled by Yorke Capital.
Once Israel's largest investment house, Psagot has lost its top position but remains one of the major players in mutual fund and provident fund investment.
Published by Globes, Israel business news - en.globes.co.il - on June 14, 2020
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