Psagot Investment House Ltd. controlling shareholder York Capital Management LLC is about to sell the company, and could make a 150% return on its investment, made three years ago. So far as is known, York has received two offers for Psagot, one from Apax Partners, and the other from Hellman and Friedman LLC.
Apax Partners has reportedly offered to acquire Psagot at a company value of almost NIS 3.2 billion.
York Capital owns 57% of Psagot. York Capital VP Jeremy Blank is the company representative in Israel. Psagot's CEO is Roy Vermus and its chairman is Arik Steinberg.
A source at York Capital said in response, "I don’t know if at this price, we'd want to sell Psagot."
Hellman and Friedman reportedly offered to acquire 20% of Psagot at a company value of NIS 2.6 billion.
Apax said in response, "We believe in the Israeli market, and we constantly consider outstanding companies for acquisition. Apax does not comment about specific companies."
Psagot said in response, "Psagot's controlling shareholder periodically receives offers to sell the investment house, but York Capital has made no decision about selling its holding."
Psagot is Israel's largest investment house, with NIS 120 billion in assets under management, including NIS 45 billion in provident funds, NIS 30 billion in mutual funds, NIS 35 billion in investment portfolios, and NIS 6 billion in exchange traded funds. It has a debt of NIS 1 billion for its acquisition of Gadish Global Financial Services (2007) Ltd. York Capital has a debt to Bank Leumi (TASE: LUMI) for the loan taken to acquire Psagot.
York Capital acquired Psagot in September 2006 at a company value of NIS 1.28 billion. York subsequently sold shares in Psagot to Seneca Capital LP (which currently owns about 3% of the company). In late 2007, York sold a stake to Plainfield Asset Management LLC, which brought Gadish, Israel's largest provident fund, as a dowry. Plainfield currently owns 16% of Psagot.
In April 2009, Prisma Provident Funds were merged into Psagot Provident Funds Management, and Prisma's owner Markstone Capital Partners Group LLC received 24% of Psagot in exchange.
Psagot's has a market share strategy for some of its products; it has the largest shares in both the provident fund and mutual fund markets. Psagot suffers from heavy financing expenses, which totaled NIS 70 million in 2008, and amortization on goodwill. It posted NIS 740 million revenue in 2008, while its expenses totaled NIS 557 million. Net profit was NIS 20 million, and earnings before interest, taxes, depreciation and amortization (EBITDA) were NIS 280 million.
Internal assessments at Psagot mention NIS 760 million revenue in 2009, with a net profit of NIS 120 million and EBITDA of NIS 360 million.
Published by Globes [online], Israel business news - www.globes-online.com - on November 18, 2009
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