A Bank of Israel study reveals that ten privately owned business groups own 30% of companies listed on the Tel Aviv Stock Exchange (TASE). 20 business groups, nearly all of them family-owned, control 160 publicly-traded companies with a 40% share of the market.
The study, by Konstantin Kosenko, noted that the market share of the ten largest groups is among the highest in the West. The holdings of the business groups in Israel are widely diversified among the different sectors of the economy, but with a heavy emphasis on the financial sector where half of the companies can be classified as affiliated to business groups. On average, companies affiliated to business groups in Israel tend to be notable for considerable maturity, lower growth, lower investment in R&D and a higher risk than unaffiliated companies.
The study is based on the ownership data of 650 companies that were traded on the TASE in 1995-2005. The study found that 80% of affiliated companies have a pyramid holding structure and that the actual control over these companies, by the unique owners of the groups, is achieved by means of the control chain and via relatively limited capital rights.
The study gave the example of Ganden Holdings Ltd., controlled by Nochi Dankner, which controls IDB Holding Corp. Ltd. (TASE:IDBH). IDB's publicly-traded companies include the holding companies IDB Development Corp. Ltd. (TASE: IDBD), Clal Industries and Investments Ltd. (TASE: CII), and Discount Investment Corporation (TASE: DISI). Through these, IDB has stakes in Koor Industries Ltd. (TASE:KOR), Makhteshim Agan Industries Ltd. (TASE: MAIN), Knafaim Holdings Ltd. (TASE: KNFM), Super-Sol Ltd. (TASE:SAE;Pink Sheets:SSLTF), Ham-Let (Israel-Canada) Ltd. (TASE: HAML), NetVision Ltd. (TASE: NTSN), Elron Electronic Industries Ltd. (Nasdaq: ELRN; TASE: ELRN), Property and Building Ltd. (TASE: PTBL), Bayside Land Corp. Ltd.(Gav Yam) (TASE: BYSD1), Cellcom Israel Ltd. (NYSE:CEL; TASE:CEL), Clal Insurance Enterprises Holdings Ltd. (TASE: CLIS), Clal Finance Batucha Ltd. (TASE:CLFN), American Israeli Paper Mills Ltd. (AMEX: AIP; TASE: AIP), Given Imaging Ltd. (Nasdaq: GIVN; TASE: GIVN), Fundtech Ltd. (Nasdaq: FNDT; TASE: FNDT), and other companies.
Published by Globes [online], Israel business news - www.globes-online.com - on April 16, 2008
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