Rani Zim: Israel's newest tycoon

Rani Zim Photo: Oren Kahn

From founding a fast growing shopping center chain to mutual fund management through the acquisition of Psagot, Rani Zim says he is only just starting out.

"We want to inject new blood into Psagot, and put our DNA into it. We'll make the company hungry. Psagot was lacking that hunger, and we're going to change that," said Rani Zim, hours after acquiring control (75%) of Psagot Mutual Funds and Psagot Securities for NIS 309 million.

Zim doesn't lack appetite. He owns shares in three companies traded on the Tel aviv Stock Exchange (TASE) with an aggregate value of NIS 1.3 billion; his share is valued at NIS 673 million, mainly thanks to the shopping centers management company that bears his name. He also owns 100% of the privately held Office Depot chain, and 50% of the duty-free electrical and electronic goods franchise at Ben-Gurion Airport (in partnership with Electra Consumer Products).

Despite all this, Zim still views himself as just starting out. "We set targets for our companies that are several times higher than their current volumes, as shown by the sorts of activities we acquire. We build big, reliable businesses that will be very valuable, and I invest all my money in these companies. I got into the stock market to grow," he recently told "Globes."

The deal to acquire Psagot's mutual fund and portfolio management operations, closed by Zim through non-bank credit company Value Capital, which he controls, illustrates how much Zim believes in the businesses he's acquired, and how far he will go to enhance them. "We're looking at Psagot's activity as an investment house platform. Our mission is to restore its faded glory. We didn't get in it for the short-term, and I don't want to start re-selling activity of a company I've acquired to other entities. We'll invest in the people, activity, organization, market and collaborations with lots of other entities in the market. We want to bring a different flavor to the market," he explains.

Zim aims for collaborations with other entities; even now, the deal to purchase Psagot's assets was executed together with an investor group that includes, among others, Yohan Kadoche, Kenlov Capital (managed by Olivier Koenig), along with a large US-based investment house H.C. Wainwright. Once the deal is closed, Value Capital will own 75% of the acquired assets, and will have full control over Psagot's acquired operations, supported by professionals who bring with them experience in investment and finance.

Staking a claim on the TASE

The collaboration that put Rani Zim on the Israeli stock market map was done together with brother Adi. In 2010, the pair took discount food retail chain Kimat Hinam public. Just two years after the IPO, the Zim brothers made an impressive exit, selling Kimat Hinam to competitor Yenot Bitan, in a deal that netted them about NIS 350 million. Since the IPO, the two have accrued capital of some NIS 420 million from the deal through the sale of shares, trades, and dividends.

Rani Zim currently has a diverse and extensive portfolio of activities in real estate, finance, and retail. His main activity is in the acquisition and operation of shopping centers, through Rani Zim Shopping Centers, which it he took public in March 2018. Since then, the company's share has jumped 160%. This has enabled Zim, who presently holds about 54%, to realize some shares. In all, Zim has distributed NIS 70 million in shares to institutional entities.

Expanding into energy

Rani Zim Shopping Centers open-air shopping centers, are located mainly in Israel's outlying areas, including a significant number in Arab localities. These operate under the SEVEN brand name, which Zim now fully owns through his recent acquisition of SEVEN's partner, public company Midas.

Immediately after the NIS 70 million Midas share purchase, Zim said "In line with the company's vision, we will continue with and accelerate development of projects in the Arab communities, and deepen the company's activities there, as well as in the Jewish outlying regions and under-served neighborhoods, and we're looking into expanding into additional activities, including medical and high-tech parks."

"We chose to implement this transaction through a direct, clean acquisition of property rights without also acquiring liabilities or other assets that were owned by Midas, and that do not relate to the core activity in the Arab sector. The deal structure will allow us to enhance and optimize the value of the acquired assets, along with the continued improvement of the rest of the company's assets."

As for medical parks, Zim Shopping Centers already began pursuing the matter last year when it announced an initial contract with landowners from the Arab sector to lease 17.5 acres near Arraba and Sakhnin in the Galilee. The project would establish a campus with 120,000 square meters of buildings, including a medical center, and providing employment and services.

Zim is not resting on his laurels. He said, when recently discussing upcoming plans with "Globes". "In the coming year, we have a mall under construction in Ganei Tikva that's going to open by the end of the year, a shopping center in Tira opening in a month or two, an extension [of an urban food center] in Beit She'an that will open in two months, and our Zim Urban Life Kfar Saba will start generating income in four months."

Zim prefers diversifying his businesses, to counterbalance the dominance of the shopping center company. For example, his investment in a 17% stake in Brenmiller Energy Storage, in which he became a partner this year, with an investment of nearly NIS 20 million.

The future: financial sector activity

The acquisition of Psagot's assets will enable Value Capital, in which Zim became the controlling shareholder in July 2020, to develop a fourth financial activity. It will enter into fintech and credit underwriting activities through financial technology product developer AppliCheck, into digital wallet activity through Prepay, which issues and markets international rechargeable debit cards, and into logistics funding through cooperation with customs brokers.

Although Zim is active in the financial world, he is the first to admit that Psagot Mutual Fund's NIS 40 billion in assets, and NIS 50 billion in portfolio management assets, significantly upgrade his presence in the financial world. "It's definitely a step up, although I'm used to making deals in the millions so, relatively, it's not a big deal in terms of scope, and doesn't scare me. I understand investing and make lots of investments in both my private and public companies. I know they're hungry for success, the energy to succeed, and lots of intelligence and experience. If the people are willing, the sky's the limit and there's no doubt we'll bring results."

As to the question of the remaining 25% of Psagot Portfolio Management and Psagot Mutual Funds, which remains with Altshuler Shaham, (who must sell them within a year), Zim says that, in the meantime, he has no intention of acquiring the full holding. "We've purchased 75% of the activity now, and feel very comfortable with that," he explains.

The plan: Keeping the "Psagot" brand

Zim also feels comfortable with Psagot's employees who will be keeping their jobs; he has even promised to maintain the Psagot brand name. "At the moment, we're keeping the current management. We'll come in, understand Psagot's activities, have one-on-one state-of-play meetings with everyone, and then make decisions about management going forward. My belief is that Psagot has very good human capital which can be maximized, and one of my tasks is to improve every employee's performance."

Zim believes in his new acquisition's activity. In light of the results, it seems the market also believes in him. A good recent example is the debit side, Rani Zim Shopping Centers having raised about NIS 250 million at a mere 1% long-term interest rate.

Psagot: Property sales - done

Psagot, originally founded by Bank Leumi (TASE: LUMI), was once Israel's largest investment house. In recent years, however, it had lost its prestigious standing and - more significantly - its assets. For a long time, Apax Partners, which controlled the investment house, had tried to sell it. Last February, Apax signed an agreement to sell Psagot to Altshuler, which then became the country's largest investment house.

It was Altshuler Shaham Provident Funds & Pensions that acquired Psagot for NIS 910 million. However, because regulations prohibit provident and pension companies from holding non-pension provident activities, such as mutual funds or portfolio management, it was forced to sell Psagot Mutual Funds and Psagot Securities together with the brokerage activity. The transaction closed last week, with the sale of these activities to Rani Zim (75%).

Additionally, two other agencies owned by Psagot were sold - Clal Insurance acquired Davidoff Insurance Brokers for NIS 68 million, and shortly thereafter Asaf Banai and Shlomi Alberg, the founders of Profit Financial Services, repurchased the agency they had previously sold to Psagot for NIS 160 million.

ID card: Rani Zim

  • Personal: age 46, married + 4, lives in Kfar Ma'as; an avid sports fan
  • Professional: Chairman of Rani Zim Shopping Centers, Chairman of Value Capital
  • One more thing: His listed holdings include Rani Zim Shopping Centers (market cap: NIS 490 million); Value Capital (NIS 136 million), Brenmiller Energy (NIS 47 million); Private holdings include Office Depot (100%) and Duty Free (50%)

Published by Globes, Israel business news - en.globes.co.il - on June 6, 2021

© Copyright of Globes Publisher Itonut (1983) Ltd. 2021

Rani Zim Photo: Oren Kahn
Rani Zim Photo: Oren Kahn
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