Insurance companies Clal Insurance Enterprises Holdings Ltd. (TASE: CLIS) and Migdal Insurance and Financial Holdings Ltd. (TASE: MGDL) are expanding their investment in Israeli fintech company Pagaya. Together, they will inject $400 million into the company.
Pagaya manages investments in consumer credit in the US through an artificial intelligence, machine learning--based system, which examines applicants for credit and recommends preferred deals to credit companies. Last February, Pagaya announced a $100 million equity round led by Singapore's sovereign wealth fund.
Pagaya's international investment funds specialize in investment in vehicle-backed credit, consumer credit, real estate, and insurance. Among the financial institutions in Israel invested in Pagaya, besides Clal and Migdal, are The Phoenix Holdings Ltd. (TASE: PHOE1;PHOE5), Bank Leumi (TASE: LUMI), Bank Hapoalim (TASE: POLI), Union Bank of Israel (TASE: UNON), Bank of Jerusalem, Meitav Dash, and More Investment House, alongside international investors such as the Singapore sovereign wealth fund GIC Private Limited, US insurance company Aflac, Credit Suisse, and asset management companies DoubleLine Capital and Angelo Gordon.
Pagaya employs about 200 people at its main offices in Tel Aviv and New York. The company recently announced that it planned to recruit another 100 people for its R&D team in Israel in 2021.
Pagaya co-founder Yahav Yulzari said, "The coronavirus year represented an important test for Pagaya, a test that the company passed with flying colors. In fact, the company's performance in this period is worth ten years of track record, added to the five years since the company was founded. The ability to maintain stability over time is one of the main aims of the investment approach that we are introducing.
"In the coming year, we plan to launch new investment products and to implement innovative investment principles, including ESG, which prioritizes not just financial return but also important factors such as proper corporate governance, inclusiveness, and more. By integrating these principles, we provide our investors with important added value."
Migdal Insurance Company chief investment officer and deputy CEO Guy Fischer said, "Pagaya is one of the most important fintech companies to have sprung up in Israel. It has managed to demonstrate how the use of advanced technological tools generates value in investment analysis. Migdal is delighted to join the Pagay funds in the area of debt in the US, and looks forward to deepening the cooperation between the two companies in the future."
Clal Insurance CEO Yoram Naveh said, "We have been an investor in Pagaya since 2017, when Pagaya was a young company, out of great faith in its investment strategy, its unique model, and its leadership team. Pagaya's investments allow Clal Finance exposure to a segment to which we are not exposed directly. Pagaya's strategy has so far proved its resilience in the coronavirus crisis, and we have therefore recently substantially expanded our investments in the company's funds.
"Clal Finance continues its strategy of recent years of expanding its investments in privately-held technology companies, and it currently has a private portfolio of $1.2 billion, in various segments of this field," Naveh continued. "There is no doubt that fintech, which has undergone a revolution in the past few years, has produced and will produce many interesting companies, and we are examining and carrying out new investments in this field that will bear fruit in the coming years. Pagaya is one of the largest and most interesting investments in our portfolio, and we are delighted with the fruitful cooperation with the company and its team."
Published by Globes, Israel business news - en.globes.co.il - on January 13, 2021
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