Israel Discount Bank (TASE: DSCT) board of directors will convene in the coming days to approve the sale of a 14% stake in its subsidiary Israel Discount Bank of New York (IDB) to US investment firm Gallatin Point Capital for $150 million. Gallatin Point was until recently one of the controlling shareholders in Israel insurance and finance company The Phoenix Holdings (TASE: PHOE). A senior source familiar with the deal said that talks for the sale were in advanced stages. If completed the deal will reflect a valuation of $1 billion for IDB, which is a fully accredited US bank.
Gallatin Point will buy the stake at a 15% discount according to IDB’s valuation of $1.16 billion in Discount Bank’s financial reports. IDB’s equity stands at $1.25 billion according to its most recent financial reports, which would reflect a 20% discount.
IDB is considered one of Discount’s strongest businesses
IDB is a regional US bank offering retail banking services, and private banking services for wealthier customers in the US and worldwide. It is considered one of the strong business points of Israel Discount Bank and kept the Israeli bank clear of the problems with the US Internal Revenue Services (IRS) that plagued some of Israel’s other big banks last decade. This is because IDB has been careful to act as a local bank observing US regulations rather than the branch of an overseas bank.
However, regional banks in the US have been suffering from negative sentiment from investors in the stock market over the past year. This pressure increased after the collapse of Silicon Valley Bank (SVB) last year. The reason for its collapse was the sharp increase in interest rates that eroded SVB’s capital reserves. Subsequently more regional banks collapsed, with others also coming under investor and customer pressure.
Gallatin Point Capital together with UK fund Centerbridge sold part of its controlling stake in The Phoenix Group last month. After that deal, Phoenix will become a public company without a controlling core. Gallatin Point, which manages assets worth over $5 billion, was founded by Matthew Botein and Lewis Sachs. The fund is headquartered in Greenwich, Connecticut.
Published by Globes, Israel business news - en.globes.co.il - on August 13, 2024.
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