Delek Group Ltd. (TASE: DLEKG) could be nearing the sale of its controlling interest in The Phoenix Holdings Ltd. (TASE: PHOE1;PHOE5) in an off-floor deal. The heads of overseas investment fund Centerbridge holding talks with Delek Group on the acquisition of the controlling interest in the insurance group are visiting Israel this week to meet with Delek Group and Phoenix executives, and in order to meet with high-ranking officeholders in the Capital Market, Insurance, and Savings Authority.
As far as is known, Centerbridge is unwilling to sign a binding memorandum of understanding before seeing whether the responsible regulator is willing to approve the sale of an insurance group to a private foreign fund. Capital Market, Insurance, and Savings Authority Supervisor Moshe Bareket is authorized to approve the deal if and when it takes place. In recent years, regulation was the main barrier to completing deals in the insurance sector. Bareket was formerly chairperson of Phoenix on Delek Group's behalf. Under the arrangement for preventing conflicts of interests signed by Bareket when he became supervisor, he stopped working for Delek Group, controlled by Yitzhak Tshuva, in May 2015.
As far as is known, Centerbridge is trying to acquire control of Phoenix, which includes the Excellence investment house, for NIS 1.6 billion, according to the company's market cap and less than its shareholders' equity. Sources also said that Centerbridge will in any case not acquire Phoenix by itself; it plans to add other funds from the US and the UK to the deal.
As of now, the parties have signed no binding letter of intent. The contacts between Delek Group, managed by CEO Asi Bartfeld, and the foreign fund, have been taking place for several months. As far as is known, Delek Group is also negotiating with other foreign groups. Delek Group has signed several agreements to sell the controlling share in Phoenix in recent years, but these agreements failed to produce an actual deal. Under the provisions of the Promotion of Competition and Prevention of Concentration Law, Delek is obligated this year to sell its holding in Phoenix until its stake in the company falls below 5%. This necessity comes on top of a switch in focus at Delek Group to energy activity in recent years. If Delek Group is unable to sell Phoenix to a strategic investor, the insurance company will be sold on the Tel Aviv Stock Exchange (TASE). Delek Group sold over 15% of the shares in Phoenix on the TASE last year.
Centerbridge previously negotiated to acquire Psagot Investment House Ltd. from Apax Partners, but as far as is known is not interested in going ahead with this deal.
Published by Globes, Israel business news - en.globes.co.il - on February 19, 2019
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