Phoenix Rises: International Investors Fuel Growth with Strategic Acquisitions

In a significant development for the Israeli financial sector, international and Israeli investors have agreed to acquire up to 21.5% of Phoenix Holdings (TLV: PHOE), a leading Israeli financial group, from Centerbridge Partners and Gallatin Point. This strategic move, announced on January 20, 2025, is set to further diversify Phoenix's shareholder base and fuel the company's growth trajectory.

The investments involved an agreement for the sale of 4.95% of Phoenix shares to Affinity Partners at a price of NIS 37.50 per share. Additionally, an additional ~6.5% of the shares will be executed in off-market blocks to various international institutional investors, including Lazard Asset Management, at the same price. Affinity Partners has further committed to acquiring an additional 4.95% of Phoenix subject to receipt of regulatory approval.

Concurrently, various arrangements between the funds and Delek are being closed out, including the payment of a loan agreement stemming from the 2019 acquisition of the controlling stake from Delek. As part of this process, Delek will also acquire a 4.99% stake in Phoenix at the agreed rate of NIS 37.50 per share.

Centerbridge and Gallatin Point, who acquired control of Phoenix in 2019, will remain with approximately 10.0% after effectuating these transactions.

For the past 70 years, Phoenix insurance has positioned itself as one of the most trusted brands in financial services in Israel, currently with over $130 billion USD under management. The firms were impressed with the Phoenix’s reach within Israel, servicing half of the adult Israeli population, and delivering 15% ROE and 19% assets under management compound annual growth over the past 5 years. As Israel continues to grow in both population and GDP, with excellent management and investment partners, Phoenix will remain as one of the leading Israeli financial service companies.

Phoenix will continue under the current management, led by Eyal Ben Simon as CEO, Benny Gabbay as Chairman and other leading international and Israeli directors. The funds, in accordance with their holding permit, will transition their affiliated directors off the board in the coming months. Ben Simon and Gabbay have recently personally invested in the Phoenix and they, along with other management team members, expect to increase their holdings in the future.

Ben Langworthy (Centerbridge) and Lee Sachs (Gallatin): “The management team and employees of the Phoenix are among the best in the industry. We have been proud to work alongside them as they transformed Phoenix into one of the nation’s leading financial institutions. We are excited that these transactions will further diversify the shareholder base of Phoenix. These transactions represent a significant vote of confidence in Phoenix and Israel, and the company’s excellent work over the past several years. We look forward to continuing to support the management team as they lead Phoenix to even greater heights.”

Jared Kushner (Affinity): “We are excited to become significant shareholders in Phoenix. Affinity is long-term bullish on Israel because it is one of the fastest growing countries in the OECD, both in terms of population and GDP growth. We look forward to working closely with the company as it continues its journey toward becoming a globally recognized financial services provider.”

Eyal Ben Simon and Benny Gabbay (Phoenix): “Today signifies a significant milestone for Phoenix. Alongside Centerbridge and Gallatin, we have laid the strategic groundwork that has shaped Phoenix into a leading financial group in Israel, attracting interest from top international investors. We look forward to continuing to develop and grow the company, bringing it to new heights for the benefit of all our shareholders.”

Jefferies acted as sole global coordinator, bookrunner and financial advisor to Centerbridge and Gallatin Point on the transaction. Fischer (FBC & Co.) and White & Case LLP acted as legal counsel to the sellers. Gornitzky and McDermott Will & Emery acted as legal counsel to Affinity. Mizrahi Tefahot Bank Ltd. acted as lender to Centerbridge and Gallatin in their original share purchase as well as agent in connection with this transaction.

In conclusion, the strategic acquisitions by international and Israeli investors in Phoenix Holdings represent a significant vote of confidence in the company's future prospects and the Israeli financial sector as a whole. With a diversified shareholder base and strong management team, Phoenix is well-positioned to continue its growth trajectory and deliver value to its shareholders.