One glimpse at the ramified holdings tree mapping out Zeevi Holdings’ acquisitions in the last two years is enough to realize that Zeevi Holdings is a concern for all intents and purposes. Any lingering doubts about the company’s status have been dispelled by its purchase of Cable & Wireless’s stake in Bezeq - a $630 million investment that catapulted Gad Zeevi to the first rank of movers and shakers in the Israeli business sector.
Like Zeevi, the Dankner family, Yitzhak Shrem, Yitzhak Tshuva, Zadik Bino and Motti Zisser have long been active in the business sector. It is no coincidence that their quantum leap occurred only in the last couple of years, by acquiring control of a large enterprise that had been privatized or put up for sale, following the structural changes imposed on banks and concerns.
In recent years, these well-known figures discovered that, in order to rule a local business empire, there’s no need to set it up from scratch. The name of the game is bank credit. Although there’s nothing new about it, an increasing number of businessmen appear to be losing their fear of using massive bank credit for large acquisitions. The banks, for their part, have always been only too glad to provide financial backing for such deals.
Naturally, the banks wouldn’t give credit to everybody. They demand securities and personal guarantees for a considerable part of the loan. It’s a club that admits only individuals of great and proven personal wealth, although admission rules have been somewhat eased.
The new member, Gad Zeevi, still keeps mum about his intentions, but his latest acquisition is probably the leadup to an attempt, within a group, to buy the controlling share in Bezeq, when the State puts it up for sale. As the Danker family’s experience has shown (Poalim Investments), buying a strategic share package is no guarantee for the purchase of a controlling share, but it certainly constitutes an advantage. Zeevi’s acquisition of C&W’s stake in Bezeq was probably not a financial investment, yet if he sells some of his holding to a third party to reduce his exposure to the banks, the move will not come as a surprise.
Zeevi’s intensive business activity in Israel in the last two years will probably wipe out the memory of his past setbacks in seeking to buy up Paz and Mizrahi Bank. Zeevi made his business debut in 1964, operating within a family company involved in civil engineering works that flourished in the aftermath of the Six Day War. In the seventies he operated in the real estate and energy sectors in Africa. Until two years ago, Zeevi used to hit the headlines mainly thanks to investments abroad, such as oil refineries in Puerto Rico, filling stations in Romania, and real estate deals in the US.
The opening shot in Zeevi’s Israeli shopping campaign was fired in November 1997, when he bought 50% of vehicle importer Japanauto. A few months later, he acquired the controlling share in Clal Trading from Clal and from the public for NIS 550 million.
Zeevi Holdings has become Zeevi’s core business in Israel. The company split its computer division into two prospering companies: Malam Systems and Zeevi Computers. Another subsidiary, Zeevi Networks bought the controlling share of the ACE DIY and Auto Depot chains.
The Zeevi group, led by Menahem Inbar, is making deals at a fast and furious pace.
Two months ago, Zeevi gave an interview to "Globes". In response to the question of whether he was making a comeback in Israel, he replied, "It’s more difficult to do real business in Israel than abroad, on account of the culture of government, which reflects a Bolshevik economy that has already disappeared from a lot a countries, but which still survives in Israel. One must make more efforts here in order to avoid disappointment. Free economy per se doesn’t exist here.
"The time it takes to get a license for putting up a building in Israel is usually 300% of the time it takes to do the actual construction. The cost involved in bureaucratic procedure accounts for 20% of the project’s overall cost." At the same time, however, Zeevi added, "I think that the older you grow, the stronger your inclination to be where you belong. I’ve always belonged in Israel, and this is borne out by facts on the ground."
Published by Israel's Business Arena October 26, 1999