Doubts are growing over regulatory approval of the sale of the controlling 32% interest in Clal Insurance Enterprises Holdings Ltd. (TASE: CLIS) by IDB Holding Corp. Ltd. (TASE:IDBH) to a Chinese consortium headed by JT Capital Fund Pte. Ltd. JT Capital has notified IDB that it has exercised its second option to extend the agreement by 30 days, until April 2, in order to complete the process for obtaining the control permit from Supervisor of the Capital Markets, Insurance, and Savings Dorit Salinger.
The third and last option to extend the deal in the original agreement expires in May, giving JT Capital two months to obtain the control permit. Any further delay requires reopening the sale agreement. No control permit has been secured 195 days after the original agreement was signed.
So far as is known, two key issues remain outstanding in the talks between the Insurance Supervision Department and JT Capital: one is the provision of audited financial statements under International Financial Reporting Standards (IFRS) on the buyers prepared by one of the world's top four auditors; the second is the regulatory capital structure of the buyers. One of the buyers has reportedly completed this process, and the two others are due to complete it within ten days.
A capital market source says that Salinger wants to approve the sale, but that she is also very cautious. "This is a very sensitive time for transactions with Chinese companies. The public also opposes Chinese investments, such as in Tnuva Food Industries Ltd.," he said.
In its notice to the TASE about the exercise of the second extension, IDB said that JT Capital confirmed that it obtaining the Insurance Supervision Department's approval was ongoing.
The Ministry of Finance declined to comment on the report.
Published by Globes [online], Israel business news - www.globes-online.com - on March 2, 2014
© Copyright of Globes Publisher Itonut (1983) Ltd. 2014