At Least 2 Bidders Interested in IDB Unit, Tel-Aviv-Based Clal Insurance

Eduardo Elsztain, the Argentine real estate developer who controls Israeli conglomerate IDB Development Corp., said he has at least two bidders for the company’s insurance unit, Clal Insurance Enterprises Holdings Ltd.

Elsztain is fighting a sale of the company in the public market after facing a court order to divest. Selling equity on the stock exchange would inflict a 40 percent loss on shareholders because the company is trading below book value, he said Friday. IDB has more than two interested parties willing to pay a much higher price than Clal’s market value, he said.

“For us to be forced to sell in the market is very negative,” Elsztain said in an interview at Bloomberg’s New York headquarters. “Let us sell with time and peace.” He said that under the anti-concentration law the deadline for a sale will be 2019. He didn’t elaborate on how he plans to respond to the recent court ruling.

The Argentine businessman, who wrested control of a distressed IDB from Israeli tycoon Nochi Dankner in 2014, has lobbied Israeli regulators unsuccessfully to keep his share of the insurer. On April 5, a Tel Aviv court ordered the trustee managing IDB’s holdings in Clal to sell the first of 5 percent tranches of the insurer’s shares on the stock exchange within 30 days, in line with the directions from Israel’s finance ministry. Regulators had given Elsztain until January 2016 to find a buyer for his entire stake, before he would have to begin unloading the stock.

IDB owns 55 percent of Clal Insurance, according to data compiled by Bloomberg. IDB hired JPMorgan Chase & Co. to advise on the sale of Clal. The floated shares have lost 6.4 percent in trading on the Tel Aviv Stock Exchange since the April court order.

The regulators are concerned about keeping Clal under IDB control because it exposes the company to the conglomerate’s heavy debt load and contributes to the concentration of corporate ownership in Israel, hurting competition. On the other hand, the government has driven off bidders from China, who were willing to pay a premium to IDB but couldn’t allay concerns of finance ministry officials.

Clal controls 15 percent of Israel’s long-term savings market, according to the company website.

[Editor’s note: Clal’s website says it has three insurance divisions for non-life insurance, long-term savings and health. Its general insurance division has a 15 percent market share, offering coverage to private and corporate customers including automotive, property, liability, marine insurance and personal accident.]