Billionaire Arison Sells Half of Her Bank Hapoalim Stake to U.S. Investors

Shari Arison, owner of Arison Holdings 1998 Ltd., signed a non-binding agreement to sell 49 percent of her investment and philanthropy arm to bring on board three North American investment firms and institutional investors. Arison agreed to sell almost 10 percent of Bank Hapoalim Ltd., Israel’s largest bank, in which the holding company owns a little over 20 percent of it that is valued at 6.5 billion shekels ($1.9 billion)

The potential buyers have yet experienced a hand with strategic investments in Israel. They would enter the controlling shareholder group in the Bank of Hapolim as long-term investors.

"Once the transaction will be completed, we will act together with our new partners, and with the bank's management and employees, to enhance responsible long-term growth for the benefit of all stakeholders, customers and the Israeli market," said Arison Holdings

The total value of the sale wasn’t disclosed, but the price will be calculated based on a valuation for Hapoalim of 24.82 shekels per share, according to Arison Holdings. Arison has confirmed that for the deal to be completed, it must be approved by the Bank of Israel.

The Bank of Israel, the country’s banking regulator, declined to comment but close sources state that it views the deal as an indication of trust in the Israeli banking system and the investors gained positive initial impression.

Hapoalim, the holding company’s most valuable asset, shares were up 2 percent, reaching 24.62 shekels at 12:10 p.m., the most in one month. Tel Aviv. Shikun & Binui Ltd., A construction company and unit of Arison Holdings, had its shares climb as much as 1.4 percent before the pairing gains.

According to calculations, if the deal pegs with the current amount of share, the purchase price translates to 3.25 billion shekels ($930 million) and represents a three percent premium over the closing price on Sept. 19. The date will be the last day of trading in Israel before the Rosh Hashana, a Jewish holiday.

 

Israel’s Worrisome Business Regulators

Business agreements have been moving in a slow pace as some potential buyers, namely potential Chinese investors, shied away citing Israel’s current business as they’ve seen their bid ruined by regulators.

In 2013, a law was passed to break up concentrated business interests which results of some of Israel’s biggest financial assets to be up for sale.   

"It’s clear that it isn’t easy to sell large stakes in banks and financial assets," stated Meir Slater, head of research at Bank of Jerusalem Ltd.

Although difficulty of selling Israeli banks increased, in the recent years, companies have improved their performance. Driven by cost-cutting measures, major lenders have grown into their profits and began boosting dividend payouts this year. Israel’s economic expansion also contributed to its main banking index rising to a record high last month.