Altshuler Shaham wants to buy Psagot but he has a problem – the capital market

Altshuler Shaham wants to purchase Psagot Investment House. Negotiations between Altshuler and the Apax Fund, the owner of the house in Psagot, are in the initial stages, but this is the most advanced negotiations at the moment in conversations between Zehavit Cohen, Apax’s manager, and interested parties. According to estimates, these are negotiations at a value of NIS 1-1.4 billion for the entire summit.

According to Altshuler’s provident company as part of its activities to locate and examine business opportunities, the company periodically examines the possibility of acquiring companies in the field. In this context, the company is examining the possibility of acquiring Psagot with the controlling owner of Psagot. But it will not happen – Altshuler Shaham may buy parts of the peaks, but certainly not all of its provident funds. In such a case it will be too large and the chance of such a deal being approved is slim. Altshuler Shaham earns more publicity and image, but it will probably not buy Psagot’s provident funds.

The mutual funds may or may not, though, Psagot leads the redemptions both in the area of ​​funds and in the area of ​​provident funds. With such a dropout, why buy it? Even so, Altshuler is the big gainer – whoever left Psagot came in most cases to Altshuler Shaham.

The scenario of a deal is a bit ironic. It contradicts in the first place the intention of the Bachar Committee – to create competition in the market. The Bachar Committee is the one that caused the banks to sell their financial management area, and this is how Psagot was sold from Leumi to the Apax Fund. At the same time, private brokers, including Altshuler Shaham (especially Altshuler Shaham), strengthened. Now if there is a deal between the two it is a death blow to the competition and the Bachar Committee. The idea was to have more players, more competition, less management fees for customers. The acquisition of Psagot by Altshuler Shaham is the opposite.

But the big irony lies in the fact that Altshuler Shaham liquidated Psagot and is now acquiring the customers. Altshuler Shaham grew to be a monster at the expense of Psagot Investment House, which did not know how to provide returns – the first in the table acquires the last in the table (in terms of returns).

The decade of Altshuler Shaham Willin Lapidot
In the last decade, two giants have emerged in the field of financial management Altshuler Shaham Willin Lapidot. Both reached a value of billions – Altshuler Shaham Provident Funds traded at NIS 3.3 billion and the whole company is probably worth over NIS 4 billion. Yellin Lapidot is roughly worth over NIS 2 billion. The good investment managers of these entities (owners) along with marketing and motivation have been able to generate returns for the public and grow in the crowded money management industry.

They grew up because they were good, and they created very significant value for their owners at the expense of dormant / weak investment managers elsewhere. Faced with their incredible rise, Psagot Investment House, which was a leader a decade ago, is losing market share and suffering from redemptions due to disappointing returns. In practice – the increase in the value of Altshuler Shaham Willin Lapidot is the mirror image of the loss of value of Psagot.

Compared to the volume of assets of about NIS 140 billion in the provident funds and study funds of Altshuler Shaham and about NIS 70 billion in Bilin Lapidot – an increase of more than 10 times in a decade, Peaks did not grow. Despite current deposits, despite a positive return resulting from vibrant financial marketers, despite being a market leader.

This failure belongs to the investment managers, the company’s managers and the controlling owner – Apex, which is managed by Zehavit Cohen. Recently, Reuven Kaplan, CEO of Psagot, resigned after a year in office. Cohen’s problem is the inability to find a manager who will change the DNA of the peaks and shoot the returns. Or it does not interest her at all, especially not now – now she’s busy selling the company.