Citigroup has responded to the entry of American investors into Bank Hapoalim of Israel and said that the American buyers will want to take on a management role in the bank, although Shari Arison has 50.1% control of Arison Holdings.
“We do not see a potential change in the control group as having any effect on the management of the bank or its strategy in the short and medium term,”Citi says. Arison still holds 51% of the bank’s control group, while it is obvious that the buyers see it as a long-term investment, If they were looking for a simple financial investment, they would buy shares of the bank directly, each 3.3%, without the need for regulatory approval or any other restriction imposed on the controlling group.”
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The names of the buyers were not disclosed in a statement yesterday on the sale of the shares, but “Calcalist” reported this morning that the University of California Retirement Plan (UCRP) is one of the purchasers. The fund was joined by an investment company and institutional body from North America.
Shari Arison selling 49% of Israel’s Largest Bank Hapoalim for $930 million
Citi is recommending a buy on Poalim shares, with a target price of NIS 26.20. The basic price of the share this morning was NIS24.60, following a 2% rise in trading yesterday, following the announcement of the sale of 49% of Arison Holdings to American entities.
Citigroup also said that in the broader sense, the American investment in Arison Holdings may mark a new direction in foreign investment in Israel. “Israelis are not foreign to foreign investment in their technology and start-up companies, but strategic investments by foreign entities in Israeli companies are far rarer.
The Arison Holdings deal, along with the recently reported deals, the sale of 52% of the Phoenix to Sirius International and the sale of 40% of SuperPharm to CVC Capital Partners, may indicate an increased international appetite for exposure to local companies in Israel, and a change in the said trend.
As for the implications of investors’ entry into overseas operations, Citi notes that “the Bank’s ambitions in the US are not a secret … they have been frozen due to the strengthening of capital requirements and the ongoing investigation of the US tax issue.” The Bank now has access to capital and expects an arrangement with the US authorities, In the coming months. “