Eyalon Demands Control of Investments in Altshuler Shaham Merger

Senior officials at Eyalon Insurance are leaning towards merging the company's provident fund operations with Altshuler Shaham Pension and Provident Funds, but are insisting on a key condition: Eyalon must retain control over investment management in the combined entity. This demand could force Yair Levinstein, CEO of Altshuler Shaham Finances and a designated stakeholder, to decide whether to remove Leah Perminger, who currently heads Altshuler Shaham's investment systems for pension and provident funds. Perminger and Levinstein have a long-standing professional relationship spanning over two decades, dating back to their time at Perfect Capital Markets, whose provident fund operations merged with Altshuler Shaham in 2009.

An Eyalon executive stated, "There are not two captains on the same ship," emphasizing Eyalon's desire for dominant management of the merged investment activities. Conversely, other market sources suggest that Altshuler Shaham Finances, which Wishor is acquiring a controlling stake in, aims to expand into new areas like mutual fund management and establishing a trading company for private investors. In this scenario, new investment management roles could be created, potentially allowing Perminger to oversee all of the company's investment activities, not just those related to provident funds.

The proposed merger initiative comes from Wishor Globatech, controlled by Emil Winshel, who recently agreed to purchase 45% of Altshuler Shaham Finances for approximately 800 million shekels. This deal values the company at about 1.8 billion shekels, with Levinstein expected to increase his stake to 25%. The merger is intended to resolve potential conflicts of interest arising from Wishor's control over two separate provident fund companies and to address concerns from minority shareholders in Eyalon.

Altshuler Shaham Pension and Provident Funds manages 107 billion shekels in provident funds, significantly more than Eyalon Provident Funds' 2.2 billion shekels. Eyalon Provident Funds began operations this year. The acquisition of Altshuler Shaham Finances is currently under review by the Capital Markets Authority and the Competition Authority. Under the potential merger agreement, Eyalon might receive shares in the combined company in exchange for its provident fund operations, which Eyalon views as an opportunity to gain a stake in a company managing both pension and provident funds, an area Eyalon had considered developing independently.

Eyalon also insists on maintaining its operations with insurance agents as a separate entity, as they are the company's primary source of new clients. Differences in investment strategies, with Altshuler Shaham favoring U.S. exposure and Eyalon focusing domestically, could also pose challenges to the merger. "If these conditions are met, we will proceed. Both sides understand the reality and want the move to succeed," concluded the Eyalon executive.