After being sold to US investment fund Warburg Pincus, credit card company Leumi Card has raised NIS 140 million in CoCo deferred notes, which are recognized as tier-2 capital.
Market sources said, "The company is thereby taking another step towards separation from Bank Leumi (TASE: LUMI) and efficient management of the capital at its disposal."
This is the first financing round of its type in Israel by a company that is not a bank. The deferred notes have a 4.6-year duration, bear 5.18% interest, and are rated A1 by Midroog.
Leumi Card previously raised NIS 1.13 billion in an issue of three-year bonds at 2.19% interest, rated AA by Maalot.
Last July, Warburg Pincus acquire a controlling interest in Leumicard for NIS 2.5 billion, with an option to pay NIS 273 million more after the deal if Leumi Card outperforms the forecasts presented to the fund. The price is 30% higher than Leumi Card's equity.
A company value of up to NIS 3 billion was initially mentioned for Leumi Card, but later assessments were that the company would be sold for about its NIS 2 billion equity, given the major regulatory changes in the sector and the loss of Leumi Card's joint customer loyalty club with Shufersal Ltd. (TASE:SAE) to the ICC-Cal credit card company. The deal eventually signed, however, was at a price substantially higher than Leumi Card's equity.
Leumi Card was represented by Adv. Amir Scharf, Senior Partner and Head of Capital Markets Department at Tadmor & Co. Yuval Levy & Co law firm and Adv. Riki Weiss Reihanie.
Published by Globes, Israel business news - en.globes.co.il - on December 18, 2018
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