Haim Katzman Moves Toward Giving Up Control of G City

Haim Katzman is taking a step toward a dramatic change in the company that has been his life’s work. Norstar, his holding company and the controlling shareholder with 54.3% of the income-producing real estate company G City, formerly Gazit Globe, said its board has decided to examine selling part of its G City stake to a strategic investor in a way that would turn the company into one without a controlling shareholder.

In practical terms, that means a sale that would leave Norstar with less than 25% of G City. For the move, Norstar has hired Discount Capital Underwriting. G City is trading at a market value of 1.9 billion shekels after its share jumped 44% this year. Norstar is trading at a value of 490 million shekels, after its share rose 20% this year. Katzman has not decided to whom the shares will be sold, and he will not have a controlling relationship with the buyer. He has several offers from different parties interested in acquiring control.

It is likely that Norstar will sell about 30% of G City shares to a strategic investor, and become a shareholder with less than 25% of G City. In that case, the investor will become the controlling shareholder. At the same time, there is a possibility that the 30% stake will be divided between two investors, and then G City will be a company without a controlling shareholder. This would allow G City to float subsidiaries such as Gazit Israel, Poland or the United States at a valuation above shareholders’ equity. That is not currently possible because a company that is floated would become a third layer in the corporate pyramid, which is prohibited under the Concentration Law. G City is trading at about half its equity, and such a move, Katzman hopes, would unlock value thanks to the possibility of floating subsidiaries.