Shari Arison to sell half of her stake in Bank Hapoalim to US investors

Heiress, businesswoman and philanthropist Shari Arison has signed a memorandum of understanding with North American investment firms and institutional investors to sell 49 percent of her shares in Bank Hapoalim Ltd., Arison Holdings said in a Tel Aviv Stock Exchange filing on Sunday.

Arison Holdings, a private company that holds a controlling stake in Israel’s Bank Hapoalim, made the announcement via the bank.

It was not immediately clear how much the deal was worth, but the Calcalist business daily pegged it at NIS 3.25 billion ($930 million). The sale price will be set according to a valuation of NIS 24.82 ($7.11) per share for Bank Hapoalim, just above the bank’s current market price. Hapoalim shares were trading 1.5% higher at NIS 24.60 at 10 a.m. in Tel Aviv and the share has risen some 15% in the past 12 months.

Arison Holdings holds a 20% stake in Bank Hapoalim. If the deal goes through, it could become one of the biggest in the country’s financial sector, Bloomberg said.

“Once the transaction will be completed, we will act together with our new partners, and with the bank’s management and employees, to enhance responsible long-term growth, for the benefit of all stakeholders, customers and the Israeli market,” Arison said in a text message.

The non-binding accord also says that buyer representatives can be appointed to relevant boards of directors.

“We have known for a while that Arison has been trying to liquidate part of her holding in Bank Hapoalim. She didn’t manage to sell a stake in the bank, so she has gone up one tier, and is selling half of her stake in Arison Holdings,” said Saar Golan, an equity trader at the Tel Aviv-based Bank of Jerusalem Ltd.

“Whoever buys above five percent in a bank or anyone getting a controlling stake will need regulatory approval, and that is not an easy process,” he said.

“Hapoalim shares are at a multi-year high at the moment, so it is a good time to sell and use the proceeds for other purposes. We expect her to sell her remaining stake as well, eventually. ”

The sale of shares comes as Israeli banks have been dogged by increased regulation and competition in their businesses and have been embroiled in investigations by US tax authorities for having aided US customers in tax evasion.

A person familiar with the matter told The Times of Israel that if and when the deal is completed, Arison will still hold 51% of the controlling stake in Bank Hapoalim.

The three North American investors, he said, will work together as a consortium with the aim of becoming a strategic partner to the bank, having entered the investment with long-term intentions in mind, the person said. The aim is to help the Israeli bank set out an international strategy and make the most of its technology abilities, the person said, adding that the investment would be a “demonstration of faith” in the Israeli banking system.

The Bank of Israel, one of the bodies that will need to approve the transaction, declined to comment. But a person close to the matter said that if the deal is indeed carried out, it would be a vote of confidence of serious foreign investors in Israel’s banking sector.

After an official request has been submitted, approval of the transaction is expected to take several months, as it requires due diligence, receipt of information from overseas regulators, and other permits, the person said.

Arison is both Israel’s and the Middle East’s richest woman, with an estimated wealth of $5.4 billion, much of it from a controlling interest in Carnival Cruise Line and Bank Hapoalim, which she inherited from her father, businessman Ted Arison. She also has substantial holdings in real estate, salt manufacturing, and water systems.

Among other philanthropic activities, Arison supports “Good Deeds Day,” an annual event encouraging the public to volunteer their time to make the world a better place. The next one is to be held on April 15, 2018.

The sale of Hapoalim’s stake will help Arison release funds to invest in other ventures close to her heart, the person familiar added, like sustainability or humanitarian projects.