The New York-based private equity firm Warburg Pincus has said that it intends to invest $221 million (NIS 800 million) over the next five years to expand its new Israeli credit card business, “Reuters” reports.
Speaking at the Bank of Israel conference, Warburg Pincus European investment head Daniel Zilberman said that the private equity firm intends to use the sum in Leumi Card which rebranded Max, into areas of lending dominated by Israel’s banks.
Zilberman said, “We are no longer a bank-owned company funded by Bank Leumi.” He added that he wanted to offer credit to more consumers, as well as small and medium-sized enterprises (SMEs). To do so, he said, we need to increase Max’s third-party financing sources, possibly via the bonds market.
The Israeli market is very centralized, Zilberman said, with only 10% of lending coming from non-banking sources compared to 50% in the U.S. Max wants to increase market competitiveness, but regulatory assistance is required for fintech companies to successfully compete with banks, he said.
“We believe that (MAX) can be an innovator and add to the competition,” Zilberman said.
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In February, Warburg Pincus acquired Leumi Card from Bank Leumi and Azrieli Group Ltd. for $693 million (NIS 2.5 billion). This follows the implementation of the Strum Committee report, which recommended splitting the credit card companies from the banks in order to enhance competition in the credit market.