Can Peretz overcome obstacles to privatization of IAI?

Amir Peretz  credit: Shlomi Yosef

The process of floating Israel Aerospace Industries on the Tel Aviv Stock Exchange is still bogged down by political wrangling.

The government has approved the appointment of Amir Peretz as chairperson of Israel Aerospace Industries (IAI), despite the opinion of the Gilor Senior Appointments Advisory Committee that Peretz did not have appropriate experience. Meanwhile, the process of privatizing IAI continues to be delayed. The company now estimates that the offering of its shares on the Tel Aviv Stock Exchange will take place only towards the end of the first half of next year.

The appointment of former government minister Peretz as chairperson of the company should remove many of the obstacles to the process. One of the most important of them is the dispute between the Ministry of Justice and the other entities involved over the removal of confidentiality (at least partially) required in an offering to the public and over restrictions on buyers of shares in this major defense company.

In recent months, "Globes" has reported the accusations, mainly by former minister David Amsalem, who was responsible for the Government Companies Authority, aimed at Attorney General Avichai Mandelblit, that his people were causing delays over these issues, and damaging the prospects of the offering. So far, despite the formation of a new government, there has been no real movement. There is still no agreement on several outstanding issues, and the delay in the activity of the Knesset and the flotation's dependence on politicians. These factors have led to the situation in which instead of the fourth quarter of 2021, on any realistic assessment the flotation will take place in the second quarter of 2022.

The previous chairperson of IAI, Harel Locker, left the position in August this year, but because of the political turmoil of the past two years and the disputes between ministers and the Attorney General, no replacement was appointed until now, and the technical process was also held up.

At IAI, the hope is that Peretz will exploit his political talents and connections to get the flotation process going again and extract the necessary decisions from the politicians and bureaucrats. On the business level, Peretz will find that the process in proceeding well, in an orderly and professional fashion. The company has been careful to avoid comment on matters such as Peretz's anti-privatization views, and sources say that the flotation process is being coordinated with the company's workers' committee. Peretz is a former chairperson of the Histadrut (General Federation of Labor in Israel) and leader of the Labor Party.

An interesting viewpoint that has been expressed is that Peretz, because of his political connections, particularly with Minister of Defense Benny Gantz, will be able to channel both internal and external deals the company's way, and that he will accompany Gantz on overseas trips and promote sales for IAI.

Published by Globes, Israel business news - en.globes.co.il - on November 30, 2021.

© Copyright of Globes Publisher Itonut (1983) Ltd., 2021.

Amir Peretz  credit: Shlomi Yosef
Amir Peretz credit: Shlomi Yosef
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