1997 was the best year ever for Poalim Investments. Profits made a huge leap forward, thanks to a first significant disposal of communications holdings the company had cultivated, in Teledata and Matav. The financial statements of Poalim Investments are signed by Avigdor Kelner, chairman of the board and general manager, one of the leaders of the Dovrat-Shrem group, which has been the controlling shareholder in Poalim Investments since the end of 1996.
The sale of Teledata shares yielded Poalim Investments a capital gain of NIS 112.3 million last year. The shares were sold (in the framework of a May issuance and thereafter), within a price range of $26-40. In January this year, Teledata published a caveat concerning the expected slowdown in its activity over the coming year. This resulted in the company’s shares being traded at a price of $16 only.
Of Poalim Investments’ private companies gaining their first exposure through the company’s financial statements (Teledata, Orlite and Transclal Trading have already published business results), the most interesting are Hazera, which engages in the production and marketing of vegetable seeds, and Ofir Holdings, itself an investment company.
Thanks to the streamlining of its production systems, Hazera wound up last year with a considerable increase in net profit - NIS 22.9 million compared to NIS 14.9 million in 1996. Hazera proposes to raise capital on Wall Street or from a private investor, and, for that purpose, has applied for its operations to be subdivided, by splitting into a seed-growing company and a seed marketing company.
Ofir Holdings last year enjoyed a hefty influx of capital gains - NIS 98.3 million from the issuance of Teledata, NIS 8.2 million from the sale of Memco shares (in the first quarter of 1998, the company will record a capital gain of NIS 7.7 million from the sale of additional shares), and NIS 4.4 million from the sale of an office building in Petah Tikva. Ofir, which last year distributed at NIS 90.4 million dividend to shareholders, holds 13% of Industrial Buildings, which ended 1997 on a profit of NIS 59.8 million compared to a profit of NIS 54.3 million in 1996.
A sector on which Poalim Investments last year recorded losses was that of venture capital investments, reflected mainly in the Trinet Venture Capital fund (ImageNet, Smart Link, Comfy, Peptor and Logal). Last year’s heavy losses of NIS 13 million were incurred by Trinet Venture due to an increase in R&D expenses and the write down of a million dollar investment in Neolan Technologies, which engages in the development of communications and multimedia products, and was sold.
Helios, too, a relatively new joint investment with Motti Zisser and Applitech, a long-standing investment in respect of which Poalim Investments wrote down NIS 4.4 million last year, recorded heavy losses. Amitel, which engages in the set-up and operation of telephone systems in Hungary, reports 78,000 subscribers. Last year, Amitel posted a loss due to a slowdown in the hook-up of new lines, the devaluation of the forint against the dollar, and an economic slowdown in its telephony areas in Hungary. Amitel may be a promising business, but meanwhile, the 1997 reports reflect a NIS 5.5 million writedown on Poalim Investments’ investment in the company.
Published by Israel's Business Arena March 24, 1998