The offer of sale of the State's Bank Hapoalim shares was closed with an over-subscription rate of 1.73. The closing price was fixed at NIS 11.56 per share, compared with a minimum price of NIS 11.28 per share. The figures for the public tender were published on Wednesday.
Those receiving share allocations included 25 leading European institutional investors, among them HSBC, Schroeder, and Credit Lyonnais. Other large bodies, however, such as Fidelity and Hermes, did not receive allocations.
The State sold its remaining 17.3% holding in the bank in the issue, raising NIS 2.4 billion. NIS 2.1 billion was raised from the public and NIS 300 million from Bank Hapoalim employees, who received a 25% discount on the minimum price. The issue was the largest in the history of the Tel Aviv Stock Exchange.
Estimates are that overseas institutional investors acquired 15% of the issue, constituting about 2.5% of the bank's shares. At the same time, there was a wide distribution of shares, with no single investor purchasing more than 0.5% of the shares. It is known that the bank's controlling shareholders did not acquire shares in the issue.
Following the sale, the State currently holds no shares in two of the four banks included in the arrangement: Bank Hapoalim and United Mizrahi Bank. The State still retains a controlling interests of 40% in Bank Leumi and 56% in Discount Bank.
"The system proved itself", said State of Israel Properties general manager Shimon Gal. "There was no precedent for an issue of this size on the Tel Aviv Stock Exchange. The special structure chosen for the issue enabled it to take place. Since there were fluctuations on the market, we constructed a special modular structure designed to solve that problem." According to Gal, it was the first time the State had used this modular issue method.
The method allowed investors to choose among eight alternatives of options and shares, with priority being given to those ordering more shares relative to options. Most orders were for the eighth (G) alternative.
Lehman Brothers Israel general manager Ron Lubash, one of the overseas distributors for the issue, said, "The issue ended above the upper bound of the range, with very lively participation of foreigners. Foreign investors injected approximately NIS 1 billion in orders.
"The combination of overseas marketing with the fact that the local market has become deep and fluid enabled $500 million in shares to be sold on the Tel Aviv market. Until quite recently, such a thing would have been unimaginable. When we went on the European road show, we were almost the only ones, and a gloomy mood prevailed in the markets. During the road show, we were glad to see a 180% turnaround."
Published by Israel's Business Arena on June 11, 2000