We have not seen such a significant acquisition in the local market for a long time, naturally such a significant transaction can have an impact, both in the immediate term and in the medium and long term, 1389487.jpg examines the consequences that such a transaction may have
The deal to purchase Psagot Investment House was signed by Altshuler Shaham Provident and Pension – the completion of the transaction is subject to regulatory approvals. According to a report by Altshuler Shaham Provident and Pension, the consideration for the transaction is NIS 910 million less Psagot’s bank debt, plus the cash balance in the company’s coffers. The agreement stipulates adjustments for the interim period until the completion of the transaction.
According to the agreement, Altshuler Shaham will act to sell the mutual fund company as well as the stock exchange member as far as possible before or after the completion of the transaction. In addition, the transaction will not include the activities of Psagot’s insurance agencies.
Altshuler Shaham Provident and Pension will operate for the sale of other Psagot Group activities that are not part of the field of study funds and long-term savings.
In the interim period until all the required approvals are received, Psagot will conduct its business during the normal course of business, as conducted prior to the date of signing the agreement.
Yair Levinstein, CEO of Altshuler Shaham Provident and Pension and Ran Shaham, Chairman of the company, who are the living spirit behind the acquisition, said: “We are excited to be the first investment house to create significant competition in the long-term savings world. We believe that our long-term results, quality of service and operation, together with continued organic growth, make us a good and stable home for Psagot colleagues. ”
1.
A big player becomes even bigger
Let’s start with the data. Altshuler Shaham currently manages NIS 147 billion in provident and continuing education, Psagot manages NIS 52 billion. Psagot is the second largest player in the field of provident and continuing education, according to data from the Ministry of Finance. That means there is an acquisition here of the strongest player in the market the second player in the market. Altshuler today constitutes about 25% of the camel market and Psagot constitutes about 9% of this market, together Altshuler Shaham will hold over 1/3 of the market.
In light of the fact that the scope of mobility in assets is lower than, for example, in mutual funds, the scope of the asset managed jointly after the completion of the acquisition will certainly be very significant. It is interesting what the Antitrust Authority will have to say in this matter, although no cases are remembered in which the Antitrust Authority stopped a merger or acquisition move.
2. The managerial challenge
This is perhaps the most significant impact. Altshuler Shaham is the player with the most significant growth in the market. According to the Ministry of Finance, in 2020, the net accumulation volume of Altshuler Shaham was NIS 31.5 billion. Far behind him, are the new player in the field – Moore Investments. Psagot is the most redeemed body, with about NIS 5.5 billion in revenue this year.
Here we need to expand a little on the history of the acquisition of peaks. For those who remember, Psagot was purchased by Prisma from Bank Hapoalim. After the collapse of a prism with a great noise, piles of piles for peaks were purchased.
But let’s remember for a moment, how provident funds were once opened, a lot of savers would open a provident fund as a kind of savings for grandchildren, at that time it was still possible to withdraw the money in capital form after 17 years. But today, it is irrelevant. The product has become a completely pension product. But, the customers of Gadish, Psagot’s big box office, came ‘independently’. That is, they do not have an accompanying agent. This means that the operation and service for these tens of thousands of customers is difficult and burdensome. This is evidenced by the volume of redemptions that Psagot has experienced in recent years, as can be seen in the attached data. In Table 2 in the last 4 years, the volume of assets leaving Psagot is about NIS 13.5 billion, mainly in light of the withdrawals of retirees, and the lack of entry of new money.
The main implication is that management resources, and very high managerial attention, will be required to curb the continued bleeding of Psagot’s assets, even after the transition. This is in addition to the managerial attention that accompanies any such merger move, in terms of manpower, operating systems, and even offices.
In light of this, the question arises as to whether Altshuler Shaham did not take a bite that would be difficult for him to swallow. Time will probably tell, but there is no doubt that there is a serious managerial challenge here. The additional question is, can not the managerial attention, and the huge challenge in this merger, impair the ability to manage the existing property at Altshuler Shaham? The big question is not whether it will actually interfere or not, but mainly what customers, and agents will think.
3. Impact on the capital market
The local capital market is making its first steps as a private stock exchange, and the results are noticeable. An increase in the volume of issues, an increase in trading volumes and activity increased. There is no doubt that the move, initiated by former PA chairman Hauser, is beginning to yield results.
Acquisition of Peaks actually takes a significant player out of the local field. A player who leaves, it means less multiplicity of opinions in the market, less diversity in investments, and this will also affect the trading cycles on our stock exchange.
Moreover, the assessment of 1390129.jpg, as well as the assessment of market factors with whom we spoke, is that Altshuler Shaham is known as a player with a strong bias abroad, among other things also because his size does not allow for comfortable activity in the local market. Compared to Altshuler Shaham, Psagot is a strong player in the local capital market, and now the question arises, how will Altshuler Shaham handle the holding portfolios of Psagot’s funds. This is mainly after the merger of the funds into Altshuler Shaham.
There will probably be no throwing of goods into the market here, but there could certainly be a move to change position over a period of months, in which Altshuler Shaham would adjust his position to his preferences, and to overseas operations. This may well affect the local capital market.
This estimate increases even if you go a little deeper into the holdings data. We examined how many shares are held in the largest fund of Psagot and do not exist in the largest fund of Altshuler Shaham. To mention, such a merger move will require the funds to merge, with the larger fund merging into the smaller one. Since Altshuler Shaham is the largest, it will merge into it the papers of Psagot.
It can only be seen from the large holdings in Psagot’s coffers that there are quite a few shares that are not in Altshuler Shaham’s portfolio, and that they will most likely not go inside. Our examination shows that there are 15 Ta-35 shares in the amount of NIS 710 million, there are another 41 Ta-90 shares with a cash volume of just under NIS 800 million, and another 45 shares with a cash volume of NIS 270 million.
Here comes the multiplicity of opinions to play a role, seeing a difference in attitude regarding investments and especially regarding the local market. The test we performed is on stocks but it can be assumed that in bonds there is also a gap between the holdings of the entities. Moreover, if a stock is present
In both funds, there will probably not be a big change in the position, since Altshuler Shaham chose to hold the stock, and now after the merger, the volume of assets will increase, so the holding must be increased
In the specific stock depending on the increase in the asset. In light of this, what is important is papers that appear in the portfolio of the Psagot box office, and do not appear in the Altshuler Shaham box office. The list attached here in Table 4, is only the main holdings, the full table can be seen when the article is uploaded on the Pander website.
4.
Fund market
Will win a new player?
According to the terms of the transaction, Psagot and Altshuler Shaham will work to sell the fund management company. Psagot manages 216 mutual funds, with a capital of about NIS 42 billion. According to 1402518.jpg economists, the scope of the management fee is approximately NIS 170 million (as of the management fee and managed capital of the beginning of the year). It should be borne in mind that the volume of assets managed in mutual funds is much more volatile than in provident funds, as recent acquisitions have shown, and even the acquisition of Altshuler that warmed the mutual funds of Menora Mivtachim.
In terms of potential buyers, this is a purchase that only players of a significant size in the capital market can make.
The Funds Law stipulates in section 23B (c) that a permit will not be granted for control of a mutual fund management company if, after the permit is granted, the total market share exceeds 20%. Psagot today constitutes about 12.4% of the fund market (which includes – traditional, financial, imitations and basket). This means that their players over 8% of the fund market leave the game, according to the fundraising / redemption data published in this issue, as of the end of January, these are the players who can not purchase Psagot – Best Purpose (17.5% of the fund market) (11.87% of the funds market), Capital Markets Tower (11.8% of the funds market).
As for the remaining mediocre players, these are mostly Moore and Bilin Lapidot. As for Moore, our assessment is that such an acquisition is a bit big on Moore, and recently rumors have been circulating that Moore is in talks to acquire Psagot’s stock exchange member, so Moore will probably not be the direction.
Yellin Lapidot has never made a purchase or merger, and Psagot’s fund operations include no arm of imitation funds and mutual funds, Shilin Lapidot has consistently kept its feet off it. In terms of market share, Yellin Lapidot constitutes about 7% of the fund market, and after the merger the joint share with Psagot will be about 19.4%, as stated, which is possible from a regulatory point of view, but it is not certain that this will happen.
Another, and perhaps more plausible, option is the return of companies to activity in the field of funds, meaning the two insurance companies that do not have this configuration of activity, with the relevant names being Clal and Menora Mivtachim. Both Clal Insurance and Menora Mivtachim used to have a fund management arm, but this activity was closed down / sold by them.
In light of this, it is too early to know what will happen to the fund company, and the question arises as to whether we will see a new player in the field, or perhaps the acquisition of Psagot’s assets by a mediocre player.
5.
A more active stock exchange member?
On the contrary, we may have found an advantage here for the local market. The activity of Psagot’s stock exchange member in the retail market was extremely low. The non-bank members of the stock exchange, who are most active with private clients, were and still are Meitav Dash, IBI and Excellence. Sale of Psagot’s stock exchange member, can
Be will create a new player that will compete with local players, on terms of trade, and activity. There are quite a few entities that can acquire such a stock exchange member, which will suit them for activity.
A new stock exchange member, with a desire to capture market share for activity, who meets a local capital market with an increase in the volume of activity, with retail customers who are interested in entering the world of investments and the capital market, can actually benefit the local market.