Even though most of Eddy Shalev’s time in recent years has been devoted to venture capital fund Genesis Partners, Shalev is now reaping the benefits of his hard work and investment in a previous venture. Actually, he has not had a significant exit for a long time, since Genesis’s great successes: AudioCodes (Nasdaq: AUDC) and EDSL, which was sold to Orckit Communications (Nasdaq: ORCT). These exits took place in a period that now looks very much like the distant past.
After a four-year business partnership with US investment bank CIBC World Markets, Shalev and the bank yesterday announced that CIBC is acquiring the E. Shalev brokerage. The new entity will be called CIBC Oppenheimer, the same name as the previous partnership. The goal of the acquisition is to strengthen the bank’s ties with institutions in Israel, such as banks, mutual funds, provident funds, and portfolio managers.
The financial details of the deal were not disclosed, but a source close to the transaction said that estimates of a $40-50 million purchase price are inaccurate and the true amount is $10-20 million. It was also learned that the acquisition was made through an earnout agreement. Shalev will receive payments from CIBC for several years, based on the development of the joint company’s business.
The link between Shalev and CIBC was initiated in 1996, after Shalev and investment bank Oscar Gruss parted company. The cooperation made CIBC Oppenheimer, which provided investment banking and research services in Tel Aviv and New York. the dominant player in the trading of Wall Street-listed Israeli securities.
CIBC provides investment banking services in Israel, where it underwrote over 80 issue and merger transactions that totaled over $4.5 billion. The bank also surveys about 40 Israeli companies. CIBC is a partner with E. Shalev in the management of Genesis, which specializes in investments in Israeli communications, Internet, and information technology companies.
Shalev: “The merger of E. Shalev with CIBC World Markets is a natural step in the profitable relations between the two companies, which will yield many advantages for institutional groups in Israel.”
”Globes”: What is the advantage of the merger? Why not continue cooperation on the previous footing?
”Consolidation is at its height. Banks that were thought to be large are merging with other banks to create conglomerates. I'm no different in this respect. The phenomenon is repeating itself, with brokerages being sold to large investment banks, so this is a natural step. Furthermore, investors are now looking for a known brand to invest with. Eddy Shalev isn't a known brand like CIBC.”
Published by Israel's Business Arena on May 2, 2001