Altshuler Shaham Finance Nears Control Sale for $275 Million

Negotiations for the sale of controlling interest in Altshuler Shaham Finances are advancing, with CEO Yair Levinstein expected to be part of the acquiring group. A local investor, whose identity has not yet been revealed, is also slated to participate. The proposed deal involves selling approximately 55.1% of the public company's shares for about 1 billion shekels (roughly $275 million), valuing the firm at approximately 1.8 billion shekels ($495 million).

Levinstein, currently holding about 14.8% of the company's 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 remain undisclosed. If finalized, the long-term savings operations of Altshuler Shaham would transfer to a group including the current CEO. The founders would retain ownership of the private activities of the investment house, which are not part of the public company.

The public company primarily manages provident and pension funds, alongside credit and alternative investment activities. Its private operations encompass mutual funds, portfolio management, hedge funds, brokerage services, and proprietary trading. This means the sale of control in the public entity does not signify the founders' exit from the investment sector; rather, it allows them to realize their main stake in long-term savings while continuing other businesses.

Despite recent declines, Altshuler Shaham Finances manages substantial assets. As of the end of June, its provident and pension assets totaled around 150 billion shekels ($41 billion), with 112 billion shekels in provident funds and 38 billion shekels in pension funds. In the second quarter, revenues were approximately 217 million shekels ($59 million), down from 231 million shekels ($63 million) in the same period last year. Net profit attributable to shareholders decreased from about 31 million shekels ($8.5 million) to 22 million shekels ($6 million).

Founded in 1990 by Gilad Altshuler and Kalman Shaham, the firm grew into a prominent player in Israel's savings market. However, in recent years, relatively weak returns and continuous client fund outflows have impacted its asset base and competitive standing, with over 140 billion shekels ($38 billion) having left the company. While recent months have seen improved returns, the link between good performance and client fund return is not immediate, as clients who moved to competitors may wait for a sustained period of positive results before returning.

The change in control could open avenues for expanding the public company's activities. Currently, some financial businesses are part of the private segment and thus excluded from the deal. Under new ownership, the company might explore entering new areas like mutual funds or brokerage services to reduce its reliance on provident and pension funds. Levinstein's participation as CEO and a significant shareholder adds a unique dimension, leveraging his intimate knowledge of the company's operations and challenges. The success of the new owners will be measured by their ability to stabilize the business beyond market rallies, evidenced by slowing fund transfers to competitors, stabilized revenues, and improved profitability.