The stock exchange will try to entice the original holders – the capital market

the stock exchange

The stock market move in the cell
-0.06%

The stock market to move
1,647
-0.06%

Base:1,648

opening:1,659

High:1,671

low:1,639

change:172,830

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Tries to complete the move to sell the stock to the public and informs the original investors (institutional investors who still own its shares) that it is considering a move in which it will buy from them the shares they must sell by law and in return allocate them new shares at a certain discount (not yet determined).

Until a few years ago, those who held the shares of the stock exchange were the institutions such as the IBI investment house, the banks, the Migdal insurance company, Meitav, etc. However, an amendment to the Securities Law obliges original investors to sell their shares – at a particularly low price of NIS 5.08 per share, ie at a value of NIS 500,000-600,000, and they are allowed to continue holding up to a maximum of 5% in the stock market shares.

However, the value at which the original holders were forced to sell their shares was significantly lower than the value of the stock exchange, and the fact that the stock exchange is now traded at a market value of NIS 1.67 billion, and at a price of NIS 16.5 per share. That is – 3.2 times more than that price. It can be argued that the price would not have reached its current value if that law had not been enacted, but the fact is that the institutional investors were forced to sell shares at a much lower price than the fair value of the shares.

The problem was that as part of the transitional provisions to the law, an extreme clause was inserted according to which even if the institutions continue to hold the shares (and enjoy dividend payments), at any future time they sell them they can only receive the original price of NIS 5.08 per share. Or in the language of the law: “When selling a Seder share, in the event that the sale price exceeds the amount per share, derived from the company’s equity according to its financial statements for 2015 (a total of NIS 5.08, hereinafter:” the basic consideration “), the seller The company is an amount equal to the difference between the sale proceeds of the arrangement share and the basic consideration (hereinafter: “the excess consideration”), when the company may use the excess consideration in a limited manner only to reduce commissions and / or investment in technological infrastructure. ”

As a result, the institutions sold most of the shares at a rate of about 80%, although this meant that they were forced to sell without a significant profit, but about 20% of the shares remained in the hands of the institutions so that they could continue to receive dividend payments. The stock exchange now hopes to entice institutional investors to sell the rest of their holdings so that the law will be carried out – and as stated, they are trying to get them to sell the shares and give them a new holding at a discount to the market price.