The preliminary institutional tender in Bank Leumi’s offer for sale yesterday achieved greater than expected success. Some 40 European investors responded to the tender, and altogether $120 million was raised, $20 million above the most optimistic forecasts.
The overseas distributors for the offer for sale, Lehman Brothers and Merrill Lynch, succeeded in bringing to it an extremely respectable group of overseas investors. Among them were George Soros’s Quantum Funds, the Swiss banks Julius Baer and Credit Suisse, Bankers Trust, Morgan Stanley, Fidelity, the world’s largest mutual funds group, ING of Holland, Merrill Lynch, and others.
Following this success, State of Israel Properties has decided to increase the scale of the issue. The intention is to issue 14% of the bank, raising an overall $310 million, fully diluted. The issue prospectus is being brought before the Securities Authority for approval this evening (Tuesday). The issue is planned to take place next Tuesday.
For the Israeli underwriters of the offer for sale - Leader, IBI, and Analyst - the success of the preliminary institutional tender in Europe makes much of their marketing work in Israel easier. The portion of the offer for sale set aside for Israel is only $30 million, and on this portion full underwriting was obtained yesterday. The underwriting list, which closed yesterday, also enjoyed surplus demand.
The money will be raised in three stages: an immediate cash call, and two further rounds of fund raising by means of option warrants. The weak spot in the success reaped yesterday is the price fixed for the offer for sale - NIS 10 for a package comprising two shares and two option warrants.
Officially this means a minimum price of NIS 5 per share, but in effect it means a lower price, seeing that the two option warrants are given for free. The official price is 8% lower than this morning’s market price for Bank Leumi shares, and, as noted, in effect it is lower still. State of Israel Properties has thus deviated from its prior undertaking that the discount in the issue would not be greater than 5% of the market price.