After it looked as though the Phoenix-Psagot deal was off the table, the two companies are expected to sign a NIS 310 million deal this week. Sources inform "Globes" that, as part of the deal, insurance and finance group The Phoenix Holdings (TASE: PHOE) will buy portfolio management and ETF activity from Psagot. Group Psagot for Finance and Investments (GPST) will receive NIS 55 million cash, and The Phoenix will take on the loan that Psagot chairperson Rani Zim took from Mizrahi Tefahot Bank to buy Psagot’s business from Altshuler Shaham in May 2021.
The Phoenix Holdings’ board of directors approved the deal on Monday, and the Psagot board approved it yesterday.
Zim and Psagot CEO Yaniv Bender were questioned by the Israel Securities Authority last week on suspicions that they made use of inside information, and Zim is suspected of securities offences, fraud, breach of fiduciary duty to a corporation, and deception. Information that has reached "Globes" indicates that Zim is suspected of having passed inside information to a senior executive at the Israel Airports Authority, whose name may still not be published, and that she made securities purchases in advance of material announcements.
The Phoenix is not buying all of Psagot’s business, and the investment house and other financial activity will continue. The deal is designed to enable Zim to reduce the leverage he took on to buy the business. Rising interest rates are causing Zim to try to reduce debt. The financials of Group Psagot for Finance and Investments for the third quarter of 2022 showed that, at the end of September last year, it had liabilities of over NIS 1 billion, versus capital of NIS 231 million. Among other things, Group Psagot for Finance and Investments has three bond series totaling nearly NIS 300 million.
Ten days ago, in response to press reports, Psagot confirmed that it had received a binding offer from The Phoenix Holdings to buy all of its mutual funds and portfolio management business, valuing it at NIS 480-550 million. Psagot stated that it had rejected the offer, and that it was made before an initial economic assessment of the business that was the subject of the offer. "This offer was ruled out by the company out of strategic, commercial, and regulatory considerations. Following on from this, the parties are in talks on a deal in a different format," Psagot stated at the time.
Shares in Group Psagot for Finance and Investments are up by more than 10% this morning in response to the "Globes" report.
Published by Globes, Israel business news - en.globes.co.il - on January 18, 2023.
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