Centerbridge eyes Israeli insurance group Phoenix

Yitzhak Tshuva  photo: Gil Yohanan

Centerbridge Partners, which is negotiating with Apax Partners to buy a stake in Psagot, is also in talks on a controlling interest in the Phoenix insurance group.

There is a new Supervisor of the Capital Market, Insurance, and Savings Authority, and potential buyers and sellers of controlling interests in investment institutions are expressing new hope. Sources reported today that while the capital market is waiting to see what happens in the negotiations by US investment fund Centerbridge Partners to acquire Apax Partners' holdings in Psagot Investment House Ltd., Centerbridge has also initiated contacts for buying the controlling interest in The Phoenix Holdings Ltd. (TASE: PHOE1;PHOE5) from Delek Group Ltd. (TASE: DLEKG), controlled by Yitzhak Tshuva.

As far as is known, the Centerbridge-Delek contacts are at a preliminary stage, and there are other parties interested in acquiring control of Israel's second largest insurance group in terms of market cap: Phoenix's current market cap is NIS 5.4 billion and its shareholders' equity is just over NIS 6 billion. The talks between Centerbridge and Apax continue, according to an informed source.

The US fund considering the acquisition of an investment institution in Israel is represented in Israel by former Mizrahi Tefahot Bank (TASE:MZTF) CEO Eli Yones. Centerbridge's contacts for buying all of Apax's shares in Psagot and a controlling interest in Phoenix are in addition to recent efforts to acquire a prominent concern in Israel, including an unsuccessful attempt to acquire control of the Leumi Card credit card company.

Delek holds 30.1% of Phoenix, just over the minimum controlling core in a large insurance company required by the Capital Markets, Insurance, and Savings Authority. The negotiations with Centerbridge are not unexpected, given Delek's repeated attempts to sell its holding in recent years. Delek sold over 10% of the shares in Phoenix on the market after the latter's share price rose.

The Promotion of Competition and Reduction of Concentration Law requires separation of holdings in non-financial corporations from holdings in financial corporations; furthermore, Delek changed its strategic focus to the global energy sector, and seeks to sell its holdings in other spheres, including the financial sector, in which it controls Phoenix, as well as Excellence Investments (TASE: EXCE), which Delek controls through Phoenix.

Phoenix is not the only investment institution up for sale. The largest shareholder in Clal Insurance Enterprises Holdings Ltd.'s (TASE: CLIS) is Eduardo Elsztain, who holds 29.8% of its shares through IDB Development. Elsztain is obligated to sell this holding for two reasons: because of the Promotion of Competition and Reduction of Concentration Law, and because his concern lost effective control of Clal Insurance in August 2013, when the Supervisor of the Capital Markets, Insurance, and Savings Authority ruled that Elsztain did not meet the conditions for owning a controlling interest in an insurance company.

In any case, all of the potential sellers of controlling interests in large investment institutions have waited in recent months for the replacement of Dorit Salinger, who vetoed large deals reaching her desk as Supervisor of the Capital Markets, Insurance, and Savings Authority. A few days ago, Dr. Moshe Bareket, a former chairperson of Phoenix appointed by Delek, became the new Capital Markets, Insurance, and Savings Authority supervisor, and the market hopes that his attitude towards these deals will be different. It is therefore likely that interest in the acquisition of Phoenix, Clal Insurance, Psagot, and possibly other institutions will soon be renewed.

Centerbridge was founded in 2005 by managing principals Jeffrey Aronson and Mark Gallogly. It manages $27 billion in investments, with most of its activity being in the US, UK, Spain, Switzerland, and Italy. The fund's representatives in Israel say that it invests mainly in financial services. Among other things, it owns Banco Santander, credit card companies, and formerly held insurance companies in Europe and North America.

Published by Globes, Israel business news - en.globes.co.il - on November 4, 2018

© Copyright of Globes Publisher Itonut (1983) Ltd. 2018

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Yitzhak Tshuva  photo: Gil Yohanan
Yitzhak Tshuva photo: Gil Yohanan
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