A huge deal just before the end of the year. The control of the insurance company the phoenix , the insurance company with the highest value in Israel, is on the way to transfer to a consortium of investment funds owned by the government of Abu Dhabi led by the ADQ investment fund. The American funds signed a memorandum of understanding with the two American funds Centerbridge and Gallatin and are expected to purchase 25% of the Phoenix group. They will join Galatin, which will remain a partner in the core of control and will own about 6% of Phoenix. At the same time, Gallatin’s representatives will continue to participate in the Phoenix board. The transaction gives Phoenix a value of NIS 9.2 billion, very similar to the value at which it is traded today – NIS 9.5 billion.
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CEO Eyal Ben Simon and chairman Benny Gabbai are also part of the emerging deal. The two are expected to purchase together with a group of managers from the insurance company up to 2% of the company’s shares which they have been leading for the past three years. As part of the agreement, the two are expected to remain in the position for the next five years. The value given by the deal to Phoenix means that for the investment the group of managers will pay up to NIS 184 million.
The control of Phoenix was acquired by the foreign investment funds Centerbridge and Gallatin Point at the end of 2019 from Delek Group of Yitzhak Tshuva. The buyers transferred about NIS 1.6 billion to Delek and received 32.5% of the Phoenix shares and control over it, and through it also in the investment house Excellence and holdings in other companies such as up to 120 (which has since been sold) and the clearing company Gamma . The value of the Phoenix was NIS 4.5 billion and has more than doubled since then, and accordingly the two funds doubled the profit on their investment.
Delek Group was among the first to sign a major deal with an investment fund from Abu Dhabi, when exactly a year ago it sold its holdings in the Tamar reservoir to the Mubadala Petroleum Fund in exchange for 1.1 billion dollars.
The fund wants to invest 200 million dollars in Israeli companies already this year
In February of this year, it was reported in Globes that the Emirates decided to renege on Crown Prince Mohammed bin Zayed’s promise to former Prime Minister Benjamin Netanyahu to invest $10 billion in private Israeli companies in various fields. The major investment funds (wealth funds) in the Emirates will share in the investments, including the ADIA fund and the Mubadala fund, but the first fund that will enter the Israeli market with an investment of 2 billion dollars, is the ADG fund from the ADQ group. The fund seeks to invest 200 million dollars in Israeli companies already this year, and a similar amount every year for the next decade. And it seems that she is already starting to do this with the Phoenix.
The transaction will be subject to regulatory approvals, including obtaining a control permit from the Capital Market, Insurance and Savings Authority. The Commissioner of the Capital Market was informed of the initial agreement of intent, when the consortium will later submit an application for a control permit to the Commissioner of the Capital Market Authority, which will be subject to the examination process accepted by law.
This is an expression of confidence by the American funds in the Israeli economy in general, and in Phoenix and its management, especially during a turbulent period in the international markets.
The Stannerbridge and Gallatin Point funds said today that they are “excited to team up with experienced investors with a similar approach, in order to help the Phoenix Group continue to develop and grow both in Israel and internationally.” The investment is an expression of confidence in the company, the Israeli market and the long-term potential of the industry. Together with the new investors and the Israeli board members, we will continue to work in full cooperation with the Phoenix management, in order to preserve its position and expand the group’s work as a market leader, and help it to be even more successful in the future.”
ADQ, established in 2018, is an investment and holding company based in Abu Dhabi, with a broad portfolio of companies. Its investments span a variety of fields that characterize the economy of the United Arab Emirates, including energy and infrastructure, food and agriculture, finance, health and life sciences, logistics and transportation, and more. As a strategic partner of the Government of Abu Dhabi, ADQ is committed to accelerating the transformation of Abu Dhabi into a competitive knowledge-based economy.