Altshuler Shaham Nears Deal for Sale Amidst Fund Outflows

Negotiations for the sale of the Altshuler Shaham investment house are intensifying, with founders Gilad Altshuler and Kalman Shaham reportedly in talks to sell their 55% stake for an estimated 1.8 billion shekels. The deal, which has gained momentum recently, involves a group of investors including current CEO Yair Levinstein, who already holds a stake and is expected to increase his share.

One potential structure being considered is a split of the company's provident fund (GML) and investment house operations. Under this scenario, Levinstein and a partner would acquire the provident fund business, while the founders would retain ownership of the investment house itself. Altshuler Shaham's controlling shareholders are Altshuler and Shaham (55% of shares valued at 855 million shekels), with CEO Levinstein holding 15%.

This potential sale occurs against a backdrop of significant fund outflows, totaling 142 billion shekels from provident funds and 20.5 billion shekels from pension funds. These withdrawals represent more than half of the assets the firm managed at its peak when it was Israel's largest investment house. The company has struggled to halt this negative trend, attributed to relatively weak returns.

The valuation of the investment house has plummeted from a high of 4.5 billion shekels to its current 1.5 billion shekels, despite a 70% stock increase over the past three years. At its zenith, Altshuler Shaham managed 215 billion shekels in provident funds; currently, it manages 109 billion shekels in this sector, with total managed assets around 150 billion shekels.

The publicly traded entity primarily handles long-term savings, including 109 billion shekels in provident funds and 37 billion shekels in pension funds, accounting for 92% of the company's revenue. Smaller, newer ventures include small business credit, construction project financing, and alternative investments, particularly in real estate. Other operations, such as mutual funds, portfolio management, brokerage, cryptocurrency, and independent trading accounts, are held by the owners' private company.