Isracard TASE IPO attracts high demand

Isracard Photo: PR

Bank Hapoalim is selling a 58.3% stake of Israel's largest credit card firm at a company valuation of NIS 2.7 billion.

In one of the biggest IPOs ever held on the Tel Aviv Stock Exchange (TASE), Bank Hapoalim (TASE: POLI) has successfully sold a majority stake in Isracard, Israel's largest credit card company. The IPO drew a demand for NIS 2.5 billion worth of shares from institutional and private investors at NIS 13.50 per share at a company valuation of NIS 2.7 billion. After examining the results, Bank Hapoalim's board of directors decided to sell 58.3% of Isracard for NIS 1.6 billion.

Bank Hapoalim had hoped to achieve a company valuation of as much as NIS 3 billion for Isracard but the results of the IPO are considered a success after market sources valued the credit card at NIS 2.5 billion. In recent weeks, Hapoalim has held a blitz of meetings with institutional and private investors with the very active participation of Hapoalim CEO Arik Pinto.

In addition to the NIS 1.6 billion that Hapoalim will receive for its 58.3% stake, it has already received an exceptional dividend of NIS 850 million, just prior to the IPO.

Hapoalim will be required to sell its remaining 41.7% stake in Isracard by 2021, the deadline set by the Strum Committee for separating the credit card companies from the banks and enhancing competition in Israel's credit sector.

Hapoalim will try to sell the 41.7% stake to a strategic buyer in order to receive premium for the controlling stake just as Bank Leumi (TASE: LUMI) did when selling its credit card company Leumi Card to Warburg Pincus. If such a buyer cannot be found, the remaining shares will be sold on the TASE over the next two years.

Isracard is Israel's largest credit card company and is highly profitable with annual net profits of more than NIS 300 million. However, investors have been concerned about future relations with Bank Hapoalim, the main distributor of the credit cards. Hapoalim has tried to dispel concerns that it would weaken its connection to Isracard after the sale, insisting that this would harm both the bank and the services provided to its customers.

Published by Globes, Israel business news - en.globes.co.il - on April 4, 2019

© Copyright of Globes Publisher Itonut (1983) Ltd. 2019

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Isracard Photo: PR
Isracard Photo: PR
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