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Tycoons Continue to Sell Off the Family Silver One Plate at a Time ; This time its Shari Arison’s turn to “De-lever”

Sherry Arison

Globe’s reported yesterday that Shari Arison, the core controlling shareholder of the Israeli Bank Hapoalim, sold off NIS 250 million (About  $69.5 million) of the bank’s shares on Thursday. The shares were distributed to several investors apparently, including many foreign investors – who are happy to buy the bank’s shares these days it seems which is in itself a very good sign.

Ms. Arison’s shares were sold at a price of NIS 17.12 per share. Since on Wednesday evening the bank’s share price had closed at NIS 17.40 she therefore sold her shares at a small 1.6% discount to what had been the market. Subsequently, the bank’s share price then fell by about the same 1.6% on Thursday and then fell further today to NIS 16.93 (at around noon).

Even after the sale Shari Arison still holds a 20.3% stake in Bank Hapoalim, or 267.5 million shares through her holding company Arison Holdings. The shares she sold yesterday were held separately by another entity she controls, Salt, which continues to hold a 1.28% stake with 17.1 million shares even after the sale.

So combined, her holding now remains 21.58% and she owns a total of 284.6 million shares. Even at today’s lower price that is worth a fair sum: NIS 4.8 billion or over $1.3 billion. Bank Hapoalim itself now therefore has a total market cap of over NIS22 billion at today’s price.
Globe’s also reports that sources close to the deal had informed them that the sale of the shares was carried out as part of the process of reducing leverage in Arison Investments’ companies, and that such a process is expected to continue.

One never quite knows how much leverage Israel’s tycoons have at any point in time, as it is by and large all in a number of different places and not usually disclosed unless there is trouble – as there is recently with Nochi Dankner for example. Nevertheless, given the number of doubtful investments that have shown up in recent times by a number of them one cannot but wonder if greater transparency might be quite a good idea.

Inheriting wealth is one thing; knowing how to maintain and even increase it by succeeding generations of tycoons is quite another.

As the Israeli economy continues to grow and expand, it will become more natural for greater depth and expertise to develop in large institutional shareholders, such as Pension Funds and Insurance Companies, for them to become more pervasive because of it and for the influence of individual tycoons to consequently gradually recede as their wealth becomes splintered with each succeeding generation of children and grandchildren who inherit. Rules to split the ownership of industrial/holding companies and financial companies are on the way too, and none too soon.

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