Spanish investment bank Andbank is acquiring a controlling interest in the Sigma investment bank, sources inform "Globes." Andbank will acquire 60% of Sigma's shares through an allocation for NIS 25-30 million. This amount, which will be injected into Sigma, reflects a value of NIS 50 million, after money. The remaining 40% of Sigma, which currently manages NIS 3.5 billion in assets, will be held by Sigma founder Prof. Dan Galai (26%) and his two partners, Ezra Attar (8%) and Abraham (Miko) Gilat (6%).
Andbank, which manages €20 billion in assets, focuses mainly on family office (personal capital management service for wealthy clients). The bank has no commercial business. Andbank has been searching for a long time for a platform to provide it with a foothold in the Israeli market. In August 2013, the bank conducted negotiations for the acquisition of 50% of Alpha Platinum, Ami Segal's investment bank, which collapsed two months later, following suspicions of embezzlement.
Andbank eventually decided to choose Sigma, a small investment bank, currently managed by Uri Galai, Dan Galai's son. Sigma currently manages mutual funds (NIS 650 million), investment portfolios (NIS 1 billion), family office (NIS 1.5 billion), and an insurance agency (NIS 170 million).
Andbank is aiming at making Sigma a global entity and a significant player in the local market, with an emphasis on private banking. Sigma's business will be expanded through acquisitions, which will probably focus on the family office sector. At the same time, Sigma will be able to provide its customers with a broader service basket, including international research and analysis.
The Spanish bank's entry into Israel is part of its strategy of becoming an international private banking boutique. Banking in Europe has recently undergone changes, following regulation and the war against tax evasion, leading many players in the industry to merge or look for new growth engines. In addition, foreign banks believe that the Israeli market has great potential, with an emphasis on the family office segment, due to Israel's relative wealth. In this context, Andbank said that Israel was a strategic focus for it with vast potential for global activity, together with local activity, and that it found the Israeli economy to be strong and stable with enormous latent potential.
Andbank, which has operated in Europe for 80 years, is considered a medium-sized bank in Spain, with branches in Andorra, Luxembourg, Monaco, Panama, and the Bahamas. The bank also owns investment houses in Brazil, Mexico, Uruguay, Switzerland, and the US.
"A global strategic partner"
Sigma is a small investment house founded in 1992 by Galai and Riky Perry, Galai's former partner. Sigma has made a number of acquisitions over the years in an attempt to grow, but has nevertheless remained small. In recent years, Sigma acquired portfolio management business, such as Hadar-Dolev, Sphera, Bonus Capital Markets, and the Green Bull family office, formerly owned by Israel Discount Bank (TASE: DSCT).
These measures were an attempt at survival in the local investment banking sector, which features erosion of revenue and profit and economics of scale - a combination that has led to a wave of mergers in recent years. Galai is considered one of Israel's leading economists and a specialist in risk management, financial engineering, and derivatives. He was awarded the Pomerantz Prize by the Chicago Board Options Exchange Market.
Andbank Deputy CEO Ricard Tubau said, "Our goal is to expand our fields of expertise in global private banking, and penetrate our expertise into the Israeli community through Sigma. We regard our new partners at Sigma as strategic partners, who built a high-quality and professional investment bank, and who will continue leading the company in the coming years."
Sigma CEO Uri Galai said, "In recent years, the capital market has been becoming more global, and the only way to provide the best services and products to the Israeli community is by introducing a global strategic partner. The deal in effect complements Sigma's strategy of providing a comprehensive solution under one roof, specifically tailored to the needs of each client."
Adv. Liora Lotenberg and Adv. Oded Ofek from the M. Firon & Co. law firm represented Sigma in the deal. Adv. Amnon Epstein, Adv. Lior Aharon, and Adv. Renan Tsoran from the Epstein Rosenblum Maoz (ERM) law firm represented Andbank.
Published by Globes [online], Israel business news - www.globes-online.com - on November 19, 2014
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