Treasury proposes IPO for 40% of Israel Postal Co

Minister of Finance Avigdor Liberman is insisting that a decision be made on the different options for privatizing the Israel Postal Company. Last week he met with Ministry of Finance director general Ram Belnikov on the matter, who is also currently service as acting head of the Government Companies Authority.

Several months ago Minister of Communications Yoaz Hendel proposed selling 100% of the Israel Postal Authority, which has been in financial difficulties for years. This was in contradiction to the government decision in 2018 to work in two stages - firstly selling 20% to a strategic private investor and then offering a further 20% on the Tel Aviv Stock Exchange (TASE).

Hendel's proposal was seen as too far reaching but following the large losses of the Israel Postal Company, the plan has gained legitimization and support in principle from the Ministry of Finance.

The most seriously considered option by the Ministry of Finance is a public offering for 40% of the company. The money raised would be channeled into the Israel Postal Company reform plan with the state refusing to put any more capital into the company.

But there could be legal obstacles to deviating from the 2018 government decision. Several companies have already submitted bids to buy the 20% stake in the Israel Postal Company and changing the government decision would also raise objections from the workers committee, which signed an agreement on the initial plan.

Any potential privatization plan would also be hampered by the Israel Postal Company's continued losses. Revenue was NIS 827 million in the first half of 2021, up 11% from the corresponding period of 2020, while there was a net loss of NIS 64 million, narrowing by nearly NIS 100 million from the first half of 2020.

The Israel Postal Company said that a major reason for the losses is the need to operate branches and to deliver mail throughout the country. This requirement has led to losses of NIS 100 million annually. Without expenditure on unprofitable services, the Israel Postal Company claims it would have had a net profit of NIS 45 million in the first half of 2021.

Published by Globes, Israel business news - en.globes.co.il - on November 29, 2021.