Investigators of the Israel Securities Authority (ISA) carried out a raid on the offices of investment house IBI today. In a report to the Tel Aviv Stock Exchange, IBI said that the investigators "carried out a search in the company's offices, as part of an investigation by the ISA into suspicions of the use of inside information, and officers of the company were questioned on the matter."
Market sources estimate that the ISA's suspicions were aroused by a report in "Globes" on a purchase of shares in investment house Halman Aldubi that IBI made in July 2020, shortly before it was reported that financial institutions were interested in acquiring Halman Aldubi at double its market cap or more.
According to the report, IBI and its owners bought shares in Halman Aldubi (in which IBI was a party at interest) for NIS 449 million in two lots. A few weeks later, on July 22, Altshuler Shaham Provident Funds and Pensions published an offer to purchase all the shares in Halman Aldubi at a valuation of NIS 230 million, 117% above the investment house's market cap before the offer, which led to a doubling of Halman Aldubi's share price.
A few days later, Halman Aldubi notified the Tel Aviv Stock Exchange that its board of directors had appointed an independent committee empowered to examine the offer by Altshuler Shaham Provident Funds and Pensions, and another bid, by a foreign financial institution, at a higher valuation.
"Globes" found at the time that the report of the offers to purchase had yielded IBI an aggregate paper profit of NIS 550,000 within less than a month - a handsome return of over 120%. At that time, IBI had two representatives on the Halman Aldubi board.
In July 2020, IBI stated, "The purchases in question were made as part of IBI's policy of exploiting the low price environment on the markets to increase its holdings in group companies. The purchases were made immediately after the release of the first quarter financial statements, in which all the information was reported to the public, with full disclosure in immediate reports. As mentioned in reports by Halman Aldubi, the information about the offers to purchase reached the company only last week, after the share purchases, and any claim of abuse of inside information amounts to slander."
IBI is controlled by Zvi Lubetzky, Emanuel Kook, and David Weisberg. It has a market cap of NIS 950 million and is headed by Dave Lubetzky.
Following the ISA raid, IBI said in a statement: "IBI has been active in the capital market since 1971. We know the law and its significance, and it would never occur to us to do anything that deviates from it in the slightest. We are cooperating, and will continue to cooperate fully with the ISA. We have no doubt that the ISA's investigation will find that we acted lawfully."
Published by Globes, Israel business news - en.globes.co.il - on July 27, 2021
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