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In a little over a decade, Altshuler Shaham has become the largest investment house in Israel under the auspices of fantastic returns that have made him the largest recruiter in the market, by a huge margin. These returns have made Altshuler Shaham synonymous with quality money management. This has turned him and one of its founders – Gilad Altshuler, who steers the company’s investments – into those who have the power to steer the market and shake it up, because many look up to them. Last June, marketers predicted declines in income-producing real estate shares. Shortly afterwards, it became clear that Altshuler Shaham had decided to reduce its holdings in a number of prominent companies in the field – such as Azrieli, Melisron and Gazit Globe – and sold their shares for hundreds of millions of shekels. A public Altshuler on the subject contributed to the continued decline.
In this respect, the acquisition of Psagot, which lost the title of “Israel’s largest investment house” to Altshuler Shaham, is first and foremost a psychological force multiplier for the strongest player in the market. Yes, the heyday of peaks is behind him, and he does not provoke competition in the market like Moore, the new star in the camel market. Still, it is the second largest investment house in Israel, and its acquisition will increase Altshuler Shaham’s assets by more than NIS 50 billion.
Moreover, the acquisition will increase Altshuler’s power in the ereputation, Since it is fortifying its position as the first in the market, and this is already much more difficult to quantify. This psychological power multiplier goes far beyond market limits. As one of the top executives in the economy told Calcalist recently: “Members of Knesset, ministers, public officials – they all melt away when faced with a person who controls NIS 300 billion. They will do anything for him, even before he says what he wants from them.”
It is likely that Altshuler Shaham Provident and Pension and the Apax Fund would not have signed the deal if they had believed that the regulators would not approve it for reasons of competitiveness and concentration; But even if the deal meets all the formal conditions – such as a total market share in the long-term savings market – and receives the approval of the various regulators, the psychological and normative level cannot be ignored.
The Israeli institutions are big on Israel
After Altshuler Shaham completes the acquisition of Psagot, it will manage assets worth about NIS 270 billion. Already today, Altshuler Shaham, like other Israeli institutions, is big on the local market. Institutions, which manage more than NIS 2 trillion, do not have too much room for maneuver when it comes to the local stock exchange, even if they really want to, since the daily trading volumes on the stock exchange averaged NIS 2 billion a day in January. To this must be added a meager supply of new goods coming to the stock exchange, mainly in the form of R&D partnerships that raise a few tens of millions of shekels each. With the volume of such assets, it is already difficult to achieve a return.
Even if a share of a small technology company yields a return of tens of percent, when it comes to a company that offers goods in the amount of NIS 100-200 million, the total portfolio of Altshuler Shaham is not a significant shift. Accordingly, only 7% of Altshuler Shaham’s assets are invested in shares in Israel. The share invested in stocks in the US, where tens of billions of dollars or more are traded by huge companies, stands at 27%.
Altshuler Shaham is not the only entity that grows on the local stock exchange and it is also not the only entity that executes a purchase transaction that will increase its power and assets. The Phoenix, a major player in its own right, recently completed the acquisition of investment house Hellman Aldubi. These consolidation procedures will increase the trend of diverting funds abroad – and in this respect it is a warning note to the local market.