Weשור Acquires 45% of Altshuler Shaham Pensions for $275 Million

Weשור Globaltech, controlled by Emil Vinshel and Zvi Barak, is acquiring a 45% stake in Altshuler Shaham Finances, the company managing pension and provident funds, for approximately 1 billion shekels (about $275 million). The deal values the company at 1.8 billion shekels. Yair Levinstein, the CEO of the public company, will increase his share by 10% to 25%. Together, Vinshel and Levinstein will purchase 55% from founders Gilad Altshuler and Kalman Shaham.

The acquisition comes as Altshuler Shaham Finances has seen a resurgence in investment returns, leading its provident funds for retirees in August. Vinshel stated his ambition to transform Weשור into a significant insurance and finance group, aiming to rival the top five insurance companies in Israel. He highlighted the valuation gap between Weשור, currently valued at 2.4 billion shekels, and major insurance firms like Migdal and Clal, which are valued at 22 billion shekels, suggesting the merger will create significant synergy.

Altshuler Shaham Finances generates about 120 million shekels in annual profit, making the deal's valuation multiplier approximately 15, considered reasonable for a company managing 145 billion shekels in assets. The company's business model, with largely fixed costs, means that increased assets under management significantly boost profits due to operational leverage. The deal's success hinges on future asset growth and fundraising rather than solely on current investment returns, which have recently improved after a period of underperformance.

A potential complication arises from Weשור's existing subsidiary, Ayalon, which is also expanding into the pension and provident fund sector. The acquisition places Altshuler Shaham, a much larger competitor, under the same ownership, raising questions about future resource allocation and potential internal competition. While immediate consolidation is not planned, a merger is anticipated within three to five years.

Following the acquisition, Altshuler Shaham Finances will be able to enter new areas previously restricted by conflicts of interest, such as independent exchange trading, mutual funds, and portfolio management, alongside expanding its non-bank credit business. The 'Altshuler Shaham' brand name will be phased out of the pension and provident fund operations within 18 months, with a new name yet to be chosen. For the two million savers, their investment tracks and personal terms will remain unchanged in the short term, though management fees will be a key area to monitor for potential adjustments.