Progress is taking place towards the sale of the Tel Aviv Stock Exchange (TASE), with lively interest being expressed by foreign stock exchanges, although no binding bids have been made. Sources inform "Globes" that around 10 foreign stock exchanges have signed a non-disclosure agreement (NDA), and assessments of the possibility of acquiring control of the TASE are now being made.
The TASE's management, headed by CEO Ittai Ben-Zeev, is conferring about the foreign parties interested in acquiring a controlling share in the TASE, without the use of external advisors or investment bankers. As far as is known, some of the foreign exchanges interested are large and important ones.
Sources added that the list includes several leading foreign stock exchanges, in addition to smaller ones, such as the Warsaw Stock Exchange, whose leaders have made contact with lawyers in Israel in order to consider a deal with the TASE's management.
The TASE has been making inquiries about selling a controlling interest in the TASE or cooperation with foreign stock exchanges for some time. Candidates for an acquisition or cooperation include stock exchanges in Toronto, London, Hong Kong, Singapore, and Sydney, Australia. It should be emphasized that not every party interested in cooperation is also interested in an acquisition.
Furthermore, there have been several inquiries from concerns that are not foreign stock exchanges, such as investment funds, which are likely to consider the acquisition of control in the local stock exchange. The TASE, however, which is supervised by the Israel Securities Authority, has stated that the search for a buyer is focusing on foreign stock exchanges or securities authorities, and there is no plan right now to expand the search and sell control in the TASE to a concern that is not a foreign stock exchange. In any case, the contacts have not yet reached an advanced stage.
As of now, the question of price has not been put on the agenda, although the TASE's value is not expected to be the decisive factor in selecting the party for acquiring the TASE. The law providing for a structural change in the TASE's ownership states that the TASE members, who are the current shareholders in it, will be allowed to benefit from the profits on the sale only up to a value of NIS 500 million for the TASE. It therefore appears that the most important facet in selecting a future buyer will be that party's added value, which will make the local capital market more attractive to Israeli companies, and even foreign ones, as well as to foreign investors.
The procedure being followed by Ben Zeev follows authorization that he received a little over a month ago from the current TASE shareholders - the banks and investment houses that are TASE members. At Ben-Zeev's request, the shareholders authorized him to mediate a deal for the sale of their shares in the TASE to a third party. The TASE members making this authorization hold an aggregate 71.7% of the TASE, which makes it possible to sell a large controlling interest in it. A three-month option deal is involved that will expire on April 18 (as of now).
If the TASE find a buyer who meets its conditions, with major foreign stock exchanges receiving preference, the buyer can acquire either all or part the shares of the members who authorized the TASE to sell (pro-rata, depending on the size of the deal). If no deal takes place, the TASE is not committed to buying shares from its members in the option agreement. The value of the shares will be the maximum for the TASE members - NIS 500 million.
Earlier this year, Ben-Zeev commented on the TASE's future, saying that its shares will probably be offered on the TASE itself in 2019. As far as is known, the offering will not be promoted before the state of the controlling interest in it is completed - i.e. whether or not there will be a dominant controlling shareholder.
Published by Globes [online], Israel Business News - www.globes-online.com - on February 27, 2018
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