Citi: Hapoalim deal may signal trend change

Bank Hapoalim
Bank Hapoalim

Analyst Michael Klahr sees the sale of a stake in Bank Hapoalim as perhaps indicating greater appetite for Israel exposure on the part of foreign investors.   

Citi analyst Michael Klahr says that the forthcoming investment in Bank Hapoalim (TASE: POLI) by a group of North American investors could signal "increased international appetite for domestic Israeli exposure." Klahr observes that investment by foreign financial institutions in Israeli technology companies (which operate globally) has become commonplace, but that such investment in companies active in the domestic market is much rarer.

"In addition we have made the point before about low active international (institutional) participation in Israeli banks and domestic companies versus other markets. Against this backdrop, this deal, together with the recently announced sale of up to 52% in insurance company Phoenix Holdings to Bermuda-based Sirius International Insurance and CVC Capital Partners’ potential purchase of 40% of leading local pharmacy chain Super-Pharm, perhaps signal increased international appetite for domestic Israeli exposure and a change in those trends," Klahr writes.

Klahr sees the investment in Bank Hapoalim as strategic: "We don’t see a potential change in the controlling group as having a major impact on the running of the bank or its strategy in the short to medium term. Arison still retains control of the controlling group with 51%. That being said, the buyers clearly see this as a long-term investment and want to play a role in running the bank. Otherwise (and if they were looking for a simple financial investment) they could have each have bought a 3.3% stake directly (in the market) without requiring regulatory approval and any of the conditions imposed on the controlling core."

Klahr cites "Globes" and other Israeli news sources as saying that the introduction of North American investors into the controlling core could assist the bank with its plans to grow in the US, and comments, "The bank’s US ambitions are not a secret - it considered a bid for Discount Bank’s US business IDBNY back in 2013 - and were put on hold due to rising capital requirements and the ongoing US tax investigation. The bank now has excess capital and expects a settlement with US authorities in the coming months according to comments on the 2Q conference call."

Published by Globes [online], Israel business news - www.globes-online.com - on September 25, 2017

© Copyright of Globes Publisher Itonut (1983) Ltd. 2017

Bank Hapoalim
Bank Hapoalim
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