The major beneficiaries of the issuance of the check clearing and non-bank credit company ERN, if and when it is implemented, are the controlling owners of it at present, the Nathanson family. Family members led by Chairman Roni Nathanson will rake in tens of millions of shekels from the transfer of control of ERN to the Insurance and Finance Group Menorah Insurers (Which currently owns 40% of the company).
Alongside them, the one who is probably waiting for the IPO to be completed is the CEO of ERN, Shay Preminger. According to the company’s agreement with Preminger, which has been in place since 2013, in the event of its issue, he will be entitled to receive a share-based payment of 1.2% of the company’s value in the issue (before the money) embodied in the corporate tax rate. According to the latest draft of ERN’s prospectus, these are shares worth about NIS 8 million, with the embodied amount standing at about NIS 10.5 million, which Preminger will receive within three days from the date of issue.
In addition, Preminger will be entitled to an issue grant in the amount of NIS 1.43 million, assuming that ERN will receive full compliance with the purchase of the offered shares according to the prospectus it published. 20% of this amount, ie NIS 286,000, will be paid to him immediately and the balance at later dates.
● Drought in the IPO market: “Companies are required to cut a quarter of the required value”
Even if issued – not at the requested value
The issuance of ERN is delayed for the time being, and in view of the decline in value that currently characterizes the primary market, there is no certainty that it will be implemented in the near future, and certainly not at the value requested by the company (NIS 800-900 million).
However, even if the credit company is not eventually issued in the near future, Preminger will receive most of the grant promised to him in March 2023, as it is a past compensation mechanism (a grant that replaced the long-term persistence bonus he was previously entitled to in the employment agreement).
Either way, the grants for the IPO or for the past grant will join the salary terms that Preminger enjoys for his day-to-day operations in the company. In 2021, the cost of his employment amounted to NIS 7.7 million, with salary components including NIS 1.6 million, share-based compensation of NIS 5 million and a bonus of NIS 733,000.
ERN specializes in securing a commitment to repay checks for businesses and in providing consumer loans at points of sale. The company has about 230 employees and operates at 15,000 points of sale. In 2021, it recorded a net profit of NIS 34.2 million, a jump of 68% compared to the previous year.
Revenues in 2021 amounted to NIS 144 million, of which interest income amounted to NIS 55 million. The volume of its transactions in all areas of activity was NIS 5.6 billion, 80% of which is from check discounting activity. The company notes that the average interest rate in the check discounting operation was 1.6%.
The CEO of Gamma received NIS 1.7 million for its issue
If the IPO materializes during the year, Preminger will be followed by the CEO of another non-bank credit company, Ariel Ganot, who manages Gamma Under control The Phoenix . Ganot received benefits for 2021 at a total cost of NIS 26 million – of which grants of NIS 5 million, of which NIS 1.7 million for the completion of the company’s issue.
An even higher component of Ganot’s employment cost was a share-based payment of NIS 10.4 million. This is an issue of restricted shares for a period of 18 months, which constitutes 1.35% of Gamma’s shares (Ganot, it should be noted, has already held about 2.5% of Gamma’s shares). To these were added a management fee of NIS 2.5 million.