Altshuler Shaham Finance Nears $270 Million Control Sale to CEO and Investor Group

Negotiations for the sale of controlling interest in Altshuler Shaham Finance are advancing, with CEO Yair Levinstein expected to be part of the acquiring group. A local investor, whose identity remains undisclosed, is also slated to participate. The proposed deal involves selling approximately 55.1% of the publicly traded company's shares for around 1 billion shekels (about $270 million), valuing the firm at approximately 1.8 billion shekels ($480 million).

Levinstein, currently holding about 14.8% of the shares, is expected to increase his stake as part of the transaction. The exact percentage of his final holding and the share distribution between him and the other investor are yet to be announced. If finalized, the long-term savings operations of Altshuler Shaham will transfer to a group including the current CEO.

Concurrently, the founders will retain control over the private activities of the investment house, which are not part of the public company. The public entity primarily manages provident and pension funds, alongside credit and alternative investment operations. Private activities encompass mutual funds, portfolio management, hedge funds, brokerage services, and proprietary trading. This means the sale of control in the public company does not signify the founders' exit from the investment sector.

Despite recent years of decline, Altshuler Shaham Finance still manages substantial assets. As of the end of June, its managed provident and pension assets totaled approximately 150 billion shekels. In the second quarter, revenues were around 217 million shekels, with net profit attributable to shareholders decreasing to 22 million shekels from 31 million shekels in the same period last year.

Founded in 1990, Altshuler Shaham grew into a prominent player in Israel's savings market. However, relatively weak returns and continuous client fund outflows have impacted its asset base and competitive standing, with over 140 billion shekels having left the company over the years. While recent months have seen improved returns, the return of client funds is not immediate, as clients who moved to competitors may wait for a sustained period of good performance before switching back.

The change in control could open avenues for expanding the public company's activities. Under new ownership, entry into additional fields like mutual funds or brokerage services might be explored to reduce reliance on provident and pension funds. Levinstein's involvement as CEO and a significant shareholder suggests confidence in stabilizing operations, but the new partners' ability to bring capital, drive acquisitions, and restructure operations will be crucial. For public shareholders, the final deal structure and its implications on their holdings remain key pending details.