US Investment Funds May Rescue Cal Deal Amid Regulatory Hurdles
Translated & summarized from Bizportal by baba
Bank Discount is seeking to finalize the sale of its controlling stake in Israeli credit card company Cal by bringing in US investment funds Glade Point Capital and Centerbridge Partners. The original deal with Union Group and Harel faced regulatory hurdles from the Competition Authority due to potential conflicts of interest. Cal's business has also been impacted by the loss of the El Al credit club, though its financial performance remains strong. The new structure aims to satisfy regulators, with the sale deadline approaching and other options like an IPO being considered.
The story in 5 lines · by baba
- US funds Glade Point Capital and Centerbridge Partners are in talks to join the acquisition of Cal.
- The original Cal acquisition deal faced regulatory issues due to Union Group's Super-Pharm holdings.
- Cal lost its El Al "Flycard" loyalty program to competitor Isracard, impacting future revenue.
- Bank Discount must sell its stake in Cal by April 2027, with an extension expiring November 1.
- Alternative options for Bank Discount include finding a new buyer or pursuing an IPO for Cal.
Bank Discount is nearing a deadline to sell its controlling stake in Cal, an Israeli credit card company, and is exploring a new structure involving American investment funds to salvage the deal at the agreed-upon price. The original agreement, struck in September 2025 with the Horesh family's Union Group and Harel Insurance, valued Cal at up to 4 billion shekels. However, the deal has faced significant challenges due to conditions set by the Israel Competition Authority and changes in Cal's business, notably the loss of El Al's credit club.
Under the proposed new arrangement, Union Group's stake would decrease from approximately 80% to less than half, while Harel would retain its 20%. The remaining shares could be acquired by US-based funds Glade Point Capital and Centerbridge Partners, both experienced in financial sector investments. This move aims to address the Competition Authority's concerns, which stemmed from potential conflicts of interest arising from Union Group's holdings in Super-Pharm, a competing pharmacy chain. The authority had demanded Union divest its stake in Super-Pharm or impose restrictions on information sharing between Cal and Harel.
Cal's business performance remains robust, with second-quarter 2026 revenues reaching approximately 843 million shekels, a 7% increase. The company processed 55 billion shekels in transactions, holds a 9.3 billion shekel credit portfolio, and has 4.2 million active cards. However, the loss of the "Flycard" club, with its 381,000 active cards, to Isracard presents a significant challenge, impacting revenue forecasts and future growth. Cal has launched "FlyAll" in partnership with Issta to create an alternative loyalty program.
Bank Discount is under pressure to complete the sale by April 2027, with the current agreement's extension set to expire on November 1. Failure to close the deal could result in a dispute over a 187 million shekel penalty. The bank is also considering other options, including finding a new buyer, accepting a lower price, or pursuing an initial public offering (IPO) for Cal. However, an IPO requires time, and the International Bank, which holds the remaining 28% of Cal, reportedly prefers a sale. The involvement of Glade Point Capital, which has a prior investment agreement with Discount Bank, and Centerbridge Partners, which has explored Israeli financial investments before, could expedite the process, pending regulatory approval.
Mentioned
