Abu Dhabi state fund-backed group to buy NIS 2.3 billion stake in Israel’s Phoenix

Consortium of Emirati funds led by ADQ in talks to acquire 25%-30% of biggest Israeli insurance company from two US private investment firms

Sharon Wrobel is a tech reporter for The Times of Israel.

Illustrative image: Israel's Phoenix Holdings Ltd. sells insurance and manages the public's pension and provident funds. (Courtesy)
Illustrative image: Israel's Phoenix Holdings Ltd. sells insurance and manages the public's pension and provident funds. (Courtesy)

A consortium of Emirati funds, led by the Abu Dhabi-based investment and holding company ADQ, is in advanced talks to acquire a controlling stake in Israel’s biggest insurance firm Phoenix Holdings Ltd., in a deal worth about NIS 2.3 billion ($674 million).

Under the terms of the negotiated deal, the Emirati group, led by Abu Dhabi government-backed ADQ Developmental Holdings, is set to buy a 25% to 30% stake of Phoenix from US private investment firms Centerbridge Partners and Gallatin Point Capital, which hold 33.44% of the Israel, Givatayim-based financial services firm. The transaction values Phoenix at NIS 9.2 billion, slightly below its market cap of NIS 9.48 billion.

As part of the transaction, Gallatin Point will remain part of the controlling core of Phoenix as a partner of the Abu Dhabi funds and retain its representation on the financial services firm’s board of directors. Additionally, Phoenix CEO Eyal Ben Simon and chairman Benny Gabbay are expected to remain in their roles and buy as much as 2% of the firm’s stock, “expressing their confidence in the company’s future,” according to a statement.

The deal, however, is still subject to receiving regulatory approvals, including a permit from Israel’s Capital Market, Insurance and Savings Authority. The consortium of Abu Dhabi funds said it intends to submit its application to Israel’s regulator and is aware that it will be bound to the legally mandated examination procedure preceding the approval of a permit.

Centerbridge Partners, with about $36 billion in assets under management, together with Gallatin Point Capital in 2019 bought 32.5% of Phoenix for NIS 1.72 billion from Itzhak Tshuva’s Delek Group. Tshuva was forced to divest from the financial services company to comply with Israeli regulatory laws applying to large conglomerates.

In the run-up to the sale, a number of deals for Phoenix by potential buyers, including Chinese conglomerate Fosun, fell through over concern by Israeli regulators that foreign groups would take control over the firm, which manages a large chunk of Israeli pension funds and the public’s savings.

Commenting on the current deal, Centerbridge Partners and Gallatin Point stated that the “transaction represents a vote of confidence in the company, the Israeli market, and the long-term potential and outlook of the industry.”

Phoenix manages NIS 364 billion in assets, including pension and provident funds, and is engaged in insurance, investment and asset management, and credit operations.

The deal marks another sign of the growing economic ties between Emiratis and Israelis since the signing of the US-orchestrated Abraham Accords. The UAE was the first signatory of the normalization agreement between the two countries in 2020.

In May, Israel and the UAE signed a free trade agreement to boost economic ties as trade hit about $2.5 billion by then. Last year, the UAE announced it was setting up a $10 billion investment fund aimed at strategic sectors in Israel such as energy manufacturing, water, space, healthcare and agri-tech.

Founded in 2018 in partnership with Abu Dhabi’s government, ADQ is an investment and holding company with a broad portfolio of investments across key sectors such as energy and utilities, food and agriculture, financial services, healthcare and life sciences, and mobility and logistics.

Last year, DisruptAD, the venture capital arm of ADQ, invested in Israel’s cultivated meat maker Aleph Farms, to help bolster Abu Dhabi’s long-term focus on food resilience. The two partners said they are eyeing setting up a manufacturing facility in Abu Dhabi to supply its cultivated meat products across the UAE and the broader GCC region.

Other notable deals between the two countries over the past two years include the reportedly $100 investment of Abu Dhabi’s sovereign wealth fund Mubadala Investment Co. in Israeli VC funds and in the startup Beewise, while Mubadala Petroleum acquired a 22% stake of Israel’s Tamar offshore gas reservoir in 2021 for some $1 billion.

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