Norway's sovereign wealth fund placed an estimated NIS 18 million in orders in the institutional part of the public offering on the Tel Aviv Stock Exchange (TASE) by Israeli telco Cellcom Israel Ltd. (NYSE:CEL; TASE:CEL) last week, sources inform "Globes." The fund eventually received a smaller allocation of shares of nearly NIS 7 million, but can also invest more in the public part of the offering. The fund manages Norway's revenue from oil and gas on behalf of the country's pensions. Investing in Israeli public companies is not a rare act for the Norwegian fund, but taking part in a TASE offering is an unusual event.
Sovereign wealth funds are state-owned funds that invest the state's money, usually from natural resources. Norway's sovereign wealth fund is the world's largest. It was founded in the 1990s, and is managed by an independent unit of the Norwegian central bank. More than $1 trillion has been accumulated in the fund to date.
Among the shares in which the Norwegian fund has invested are those of companies such as Microsoft, Facebook, Intel, and Nestle. A decade ago, the fund sold its holdings in Israeli defense company Elbit Systems because of what it described as the company's violation of humanitarian laws. The fund also refrains from investing in Israeli real estate companies working on construction in Judea and Samaria.
AON also participated in the offering
Sources also told "Globes" that another large concern that took part in Cellcom's offering was AON, one of the largest international insurance brokers. AON works in the insurance sector and manages veteran funds for customers. AON invested NIS 16 million in the offering, after having placed orders for much more than the shares it actually received.
Cellcom's immediate gross proceeds from its offering of shares and options totaled NIS 312 million. Cellcom controlling shareholder Discount Investment Corporation, controlled by Eduardo Elsztain, accounted for NIS 169 million of this amount. The company reported that as a result of this purchase, it would report a NIS 15 million equity increase in the fourth quarter of 2019. Following the completion of the offering, Discount Investment will own 46.2% of Cellcom's issued share capital and 48.5% of the voting rights in the company (including through agreements with other shareholders).
Cellcom's offering was designed to support the restructuring plan of the company, which has been affected by increased competition in the local communications market in recent years. The plan, led by Cellcom chairman Amit Erel and CEO Nir Sztern, includes a NIS 150 million reduction in its annual spending, including by substantially cutting expenses and payments to suppliers, and by through personnel cuts.
Published by Globes, Israel business news - en.globes.co.il - on December 10, 2019
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