Management Clal Insurance Recorded a small victory on Wednesday over the company’s largest shareholder, Alrov Real Estate, which is controlled by businessman Alfred Akirov. Set out, and Clal recorded good demand and sold the shares even above the market price.
However, the results of the IPO do not change anything about Akirov’s desire (who defined this week’s IPO as an “idiotic decision”) to gain control of Clal Insurance, and the application for a control permit is still being considered by the Capital Market Authority.
After two days of stretching, during which she sent Alrov Two letters to Clal Insurance in various offers to delay the offering, and this rejected its offers, Akirov Real Estate Company was forced to participate in the offering, in order to maintain its holdings in general, which stood at 15% before the offering.
Although Alrov purchased shares in the issue at a rate of about NIS 60 million, in general they decided to approve a raising of NIS 493 million, out of demand of about NIS 750 million. This means that Alrov’s share of the bids received stands at just over 12%, so its holdings in the post-IPO stock pie have been reduced somewhat.
This actually fulfilled a concern expressed by Alrov before the IPO, according to which one of the goals of the move is to dilute Alrov’s holdings in general, against the background of the long-standing tension between Akirov and the directors of the insurance company, headed by CEO Yoram Naveh.
However, the insurance company stressed this week that this is not the purpose of the offering, and that it is intended to enable business flexibility and capital strengthening. The results indicate that even if the dilution was not done with intentional intent, it did occur.
After learning of the planned IPO, Alrov tried to “turn the lemon into lemonade” and use the move to increase its holdings in general. Recently, Alrov addressed the Capital Markets Commissioner, Dr. Moshe Barkat, with a request for a control permit in general, and intends to increase its holdings to 30%.
In one of the letters she sent to Clal this week, Alrov suggested that she buy the shares offered in the offering, and that any share purchased in excess of the 15% already in her hands will be entrusted to a trustee. Alrov even applied to Barkat for approval of the move, but such approval was not received before the IPO (and it is doubtful if it would have been received at all) and in any case rejected the request, in part because the regulator’s approval was not given in advance.
Another success provided by the offering, led by Discount Capital, concerns the price at which it was made. The offering began with the intention of giving a 7% discount on the share price, but in the end the auction closed at a price of NIS 78.95 per share, slightly more than the share price at which trading closed on the day of the issue, which was NIS 78.8 per share. The insurance company refused to accept additional demands in excess of half a billion shekels at the institutional stage, because the rest of the demands were at lower prices.
In general, after the institutional phase of the IPO, it was said that the capital raised would allow all holdings to examine business opportunities, including compliance with the company’s goals and strategic plan, including – if and when required – to strengthen the group’s capital cushion and provide flexibility in capital structure management.
Yoram Naveh, CEO of Clal Insurance and Finance, noted that “the successful raising indicates a significant expression of confidence in the Group’s capital market, and it will allow flexibility to take advantage of additional business opportunities, in synergistic activities for the Group’s activities.”
Alrov goes to Assaf
Meanwhile in Alrov do not say desperate when it comes to buying more shares at all. After the end of the institutional phase, Alrov sent another letter to Clal on Thursday, the third of the week, this time with the aim of postponing the public offering phase, which is scheduled for Thursday. The scope of the public phase is significantly smaller than the institutional phase, and is expected to raise NIS 70 million, but it could return to Alrov the maximum holding rate it was allowed, 15%, if it succeeds in convincing Clal to sell at least some of the shares without a tender.
Balrov referred in the letter to the fact that Clal preferred to go public to the institutional entities, and to reject Alrov’s offer to purchase the shares for sale.
“Clal’s position is puzzling and its haste to provide an answer indicates that it did not consider as required on the basis of a comprehensive and serious factual basis the various outlines proposed by the company and / or other possible outlines as proposed,” Balrov replied to the rejection of Clal’s proposals.
The letter was accompanied by a report from an international expert in the field of corporate affairs, Prof. Barak Orbach. “The International Corporate Expert’s report states, among other things, that there are no indications that the board of directors and senior management of Clal Insurance Company acted in good faith to inform themselves and consider the good of the company,” Balrov noted.
“The circumstances subject to Clal’s hasty issuance indicate that Clal’s board of directors and senior management allegedly acted in bad faith, violating the duty of care and fiduciary duty, including acting in a manner equivalent to a ‘poison pill’ operation (without a ‘poison pill’ mechanism). “To protect the ‘lack of control over the company’ (in a company without a controlling interest) and their role in Clal.”
Akirov Real Estate also claimed that “the extreme circumstances raise questions regarding the involvement and responsibility of Clal’s internal attorney and legal advisers as well as the financial advisers who advised Clal and Organia in connection with the proceeding.”
High barrier on the part of the Securities Authority
Alrov, which is seeking to increase its holding in general to 30%, recently encountered a high hurdle posed by the Securities Authority last month, in the form of the determination that granting Alrov a control permit in the current structure of Clal Insurance would violate the Centralization Law.
This is due to a pyramidal structure that will produce the move, of three tier companies, while the law allows only two tier companies. Alrov Public is defined as one tier, Clal Public Holdings is a second tier and its granddaughter, Clal Beat, is a reporting company that is considered a third tier company.