Another large financial issue is making its way to the Tel Aviv Stock Exchange. After successful issues made this year by the companies Manif and Direct Financing, and in 2019 Isracard, Altshuler Shaham Provident and Pension, Shaba and the Stock Exchange, Globes learned that Gamma Management and Clearing, which owns The Phoenix Group is working to raise initial capital of NIS 300 million, at a company value of NIS 700 million before cash.
It is not impossible Because the offering will also include a sale offer from the shareholders, headed by the Phoenix Group, which holds 49% of Gamma shares. Phoenix purchased its shares in Gamma in 2008 for only NIS 64 million (at a value of NIS 130 million) – so an IPO with a company value 5 times higher and more will flood it with a handsome value for the investment.
It has not yet been determined that the underwriter will lead the offering, which is planned for the first half of 2021, with the market estimating that Excellence Underwriting, which belongs to the Phoenix Group, will be one of the factors that will lead the raising.
Gamma, managed by Ariel Ganot, deals with financing, discounting, clearing and managing credit card vouchers, providing credit of various types, discounting checks and factoring. Its main activity is the provision of discount cards for credit card vouchers.
In recent years, Gamma has also entered into providing credit to businesses, an area that is a favorable cushion for growth, which this year experienced upheavals caused due to the corona crisis and the consequences of closures made in order to reduce the spread of the plague. According to market estimates, Gamma holds a non-bank credit portfolio for businesses with an estimated volume of NIS 5 billion.
The discount service is a service of advance payment to businesses against the check of credit card company vouchers by the businesses to the discount company. Thus, whenever a business sells in credit card payments, it can choose to get the money in advance. To do this, he must sell the discount companies the flow of payments due to him from the customer’s credit card, in order to receive the money in return in one payment – of course less a fee.
Gamma also operates in the worlds of payment and credit clearing, when it identified a market share that is less interesting to the large credit card companies – the small businesses, at the “shawarma” level – which are often under the radar of credit card companies. The company manages to exploit the potential in the field, and in fact has created a status for itself as an association of such entities, which it actually provides them with the payment services even though it is not a credit card company.
The company’s profits, according to Phoenix reports, totaled NIS 42 million last year. However, since this is a private company that does not publish reports, its full results in 2020 – the year of the corona – will be known in full only in the prospectus that the company will publish if the IPO process matures.
At the beginning of the current year, before the eruption of the corona, Gamma completed a private raising of non-marketable commercial securities (NPTs). This rating is derived, among other things, from Gamma’s credit rating of Aa3 on a stable horizon.
After a fundraising process that attracted a lot of interest from investors, the company decided to issue NIS 250 million in VAT. Gamma then stated that the company has a credit portfolio of NIS 5 billion, and it provides credit and financial services to about 8,000 customers.
The Phoenix establishes tangent activities for insurance
The Phoenix holds 49% of Gamma’s share capital, and in addition holds shares in a group that includes CEO Ganot and chairman Eli Unger (who together hold as far as is known about 11% of the company’s shares), Zvika Rizman and Haim Fink (together hold about 25.5 %), Roni Miro from Lis Carr (probably about 12.3%) and Batya Lavie.
A few years before the Phoenix investment, Gamma was sold in 2004 to the credit card company Leumi Card, but the competition commissioner (then the Antitrust Authority) did not approve it. Leumi Card later acquired a 20% stake in Gamma, but the competition commissioner did not like that either. As a result, Phoenix then acquired the holdings of Leumi Card and another 29% of the company. At the same time, the Phoenix received an option to increase its share in Gamma, but the Bank of Israel later revoked this option.
As part of the purchase agreement, Phoenix provided Gamma with an inferior shareholder loan in relation to bank credit, in the amount of NIS 50 million. The Phoenix reports also show that last year it participated in a bond issue in which Gamma raised NIS 500 million from institutional entities, in the amount of NIS 15 million.
The acquisition of Gamma’s shares by Phoenix Was done In the era in which the group acquired a series of activities related to its main activity in the field of insurance, including Excellence Investment House and the Shekel Insurance Agency, which joined Lake Leaders. These holdings, which include, in addition to Gamma, Agam, Shekel and Excellence, also the sheltered housing network up to 120, are an important profitable anchor for Phoenix, which provides it with a source for maintaining the dividend policy it declared this year, a source on which it relies in the future.
Another aspect of this strategy was recently expressed in the acquisition of control of the Oren-Mizrah agency from Oren Cohen, at a company value of NIS 160 million.