Discount Capital Sells Majority Stake in Melaren, Books $1.7M Loss

Discount Capital, the investment arm of Israel Discount Bank, is selling most of its shares in Melaren, a non-bank credit provider, resulting in a loss of approximately 6 million shekels (about $1.7 million) after five years. The company will sell 8% of its current holdings, representing 13% of Melaren's shares, to controlling shareholder Mo'ed Ryan for 27 million shekels. This transaction will increase Ryan's stake to 57.4% of the company, as he acquires 2.5 million shares at 11.3 shekels per share. Following the deal, Discount Capital's ownership will fall below 5%, ceasing its status as a significant shareholder.

Discount Capital initially invested around 47 million shekels in Melaren in August 2021, acquiring approximately 13% of the shares at 13.5 shekels each, a price that reflected a 12% premium over the market value at the time. The investment also included options for an additional 5% stake at a strike price of 17.5 shekels per share.

Concurrently, Chairman David Granot announced his resignation effective November. Mo'ed Ryan, Melaren's founder and former CEO, is expected to succeed Granot and resume direct leadership of the company. This move signifies Ryan's increased involvement in Melaren's strategic management, a role previously held by CEO Ziv Beker in recent years.

Melaren's stock has declined 9% over the past year, with the company currently valued at 310 million shekels. In contrast, the TA Finance Index, which includes Melaren, has risen 57.5% during the same period. The management of Discount Capital's investment in Melaren has seen recent changes, with Hila Hemi departing after 11 years and Michal Kissos Herzog taking over in September, having previously managed Poalim Tech at Bank Hapoalim.