DUBAI/JERUSALEM: A consortium led by Abu Dhabi state holding firm ADQ is in advanced negotiations to acquire a controlling stake in Israeli financial firm Phoenix Group for more than $800 million, a regulatory filing showed, according to Reuters.
US private investment firms Centerbridge Partners and Gallatin Point Capital, which hold 33.4 percent of the Israeli company, are in talks to sell about 25 percent-30 percent of the company based on a value of 9.2 billion shekels ($2.7 billion) to the Abu Dhabi funds, the two US investment firms said in the regulatory filing in Tel Aviv.
Phoenix’s CEO and chairman would also buy 1 percent-2 percent of the company, the filing said.
“The transaction will be subject to regulatory approvals, which will include a control permit from Israel’s Capital Market, Insurance and Savings Authority,” Centerbridge and Gallatin said in the statement.
Some 58 percent of Phoenix’s shares would remain traded on the Tel Aviv Stock Exchange.
ADQ is buying Centerbridge’s stake in Phoenix, in a non-binding deal, which may take months to complete to receive regulatory and shareholder approvals, a source familiar with the deal said.
ADQ declined to comment.
The UAE became the first Gulf state to normalize relations with Israel under a US-brokered normalization agreement, dubbed the “Abraham Accords,” in 2020.
Phoenix Group, one of the largest financial companies in Israel with a market capitalization of around $2.8 billion, is a provider of multi-line insurance, asset management, investment and financial services.
Its Tel Aviv-listed shares were down 3.1 percent in afternoon trading and are down 7.4 percent this year. But they gained 65 percent in 2021 after double-digit gains in the prior two years.
The source familiar with the deal said ADQ had been doing extensive due diligence for months and that since Emirati investors are comprehensive, “they wouldn’t sign if they thought the chances are low.”
ADQ is buying into the Phoenix name, and the rationale is that it can make a good return on its investment, the source said, which has been enabled by the Israel-UAE normalization and which is expected to lead to more deals.
“Since Gallatin and Centerbridge entered Phoenix a few years ago, Phoenix has become more international,” the source said, adding that it was likely that Centerbridge would have been looking to sell soon.
Private equity firms generally seek to exit their investments five to seven years after buying them.
“Phoenix has benefited from a strong partnership over the past several years among management and employees, local board members and controlling shareholders,” Lee Sachs, Co-Founder and Managing Partner of Gallatin Point told Reuters.
“Each has worked tirelessly and in the same direction to constantly bring value to the company’s customers and other stakeholders.”