Ayalon Insurance Considers Merging Pension Operations with Altshuler Shaham
Translated & summarized from Ice by baba
Ayalon Insurance is exploring a merger of its pension and provident fund operations with Altshuler Shaham Pension and Provident Funds, following a proposal from its controlling shareholder, WeSure Globaltech. The move aims to resolve conflicts of interest and regulatory issues arising from Ayalon's recent significant investments in its own competing pension arm. The deal would see Ayalon receive a minority stake in the merged entity, with final approval pending an independent committee and the Capital Markets Authority. This follows a similar past merger by Ayalon in 2016.
The story in 5 lines · by baba
- Ayalon Insurance may merge its pension operations with rival Altshuler Shaham Pension and Provident Funds.
- The proposed deal is driven by Ayalon's controlling shareholder, WeSure Globaltech, to resolve conflicts.
- Ayalon's new pension arm has faced opposition and lawsuits over potential conflicts of interest.
- Regulatory hurdles, including Israel's Concentration Law, also need to be addressed.
- The merger's success depends on valuation negotiations and approval from the Capital Markets Authority.
Ayalon Insurance is considering merging its young pension and provident fund operations into Altshuler Shaham Pension and Provident Funds. The move is initiated by Ayalon's controlling shareholder, WeSure Globaltech, which proposed to Ayalon's board the exploration of a strategic partnership. Under the proposed framework, Ayalon would transfer its provident fund assets to the merged entity and receive a minority stake in Altshuler Shaham Pension and Provident Funds in return. This potential deal aims to resolve a complex business and legal situation that has developed in recent months.
Last September, WeSure, led by Emil Vinshel and Zvi Barak, acquired approximately 45% of Altshuler Shaham Finances for about 800 million shekels, valuing the company at 1.8 billion shekels. This acquisition also increased CEO Yair Levinstein's stake to 25%. Ayalon itself launched its own provident fund operations last year with significant investment and aggressive branding, including special payments to agents. Operating two competing provident fund arms under the same group has sparked strong opposition and concerns about conflicts of interest for minority shareholders of the public Ayalon company, leading to derivative lawsuits alleging harm to their rights and the company's assets.
The current structure also faces limitations under Israel's Concentration Law, which prohibits three-tiered pyramids of public companies. The proposed solution involves Ayalon receiving shares directly in the private subsidiary managing the pension funds, rather than shares in the public parent company. An independent committee from Ayalon will assess the valuation ratios to determine the final ownership percentage.
The potential merger involves a meeting of opposing interests. Altshuler Shaham Pension and Provident Funds manages over 100 billion shekels but has been experiencing significant redemptions. Conversely, Ayalon's new operation manages a much smaller sum of 2.2 to 3 billion shekels but shows consistent positive growth in new contributions. The negotiation will focus on pricing Ayalon's growth against Altshuler Shaham's scale advantage.
Even if Ayalon's committee approves the plan, final approval rests with the Capital Markets Authority, headed by Amit Gal. The regulator has recently demonstrated a firm policy by blocking a competing merger due to competition concerns. Ayalon has prior experience with such mergers; in 2016, it merged its provident fund portfolio into Meitav Dash, receiving a 20% stake which was later sold in 2022 for 120 million shekels. It remains to be seen if this current deal will proceed or be halted by regulators.
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