Who is Moti Ben-Moshe?
The 38-year-old businessman who has won creditors' backing to gain control of IDB is all about discounting, not plush corporate suites.
Moti Ben-Moshe may be about to step into Nochi Dankner's shoes on assuming control of the IDB group of companies, but the two businessmen have led very different lives so far.
Dankner was born into one of Israel's wealthiest and most influential families. As chairman of IDB, he has been one of the biggest players in the Israeli economy over the past decade and earned a reputation as a lavish spender, with private jets and plush corporate suites.
The parents of Moti Ben-Moshe, by contrast, arrived in Israel from the former Soviet republic of Georgia in the 1970s. They lived in Be'er Sheva, where he was born as Mordechai Moshiashvili. The family moved to Lod when he was still a baby, where they lived in a housing project until moving into a single-family home in the same city 20 years ago.
The father of the family, Jacob Moshiashvili, made his career at Mizrahi-Tefahot Bank and has managed a branch of the bank in Ramle for many years.
Even today, as Ben-Moshe spends most of his time running his businesses in Germany, he visits his parent at least once a month and attends the local synagogue. Members of Lod’s Georgian community say he’s discreet, conservative and pleasant.
Ben-Moshe’s discretion has served him well, and he’s managed to remain a mystery among Israel’s business community. The lack of knowledge about the man who might soon head companies like Clal Insurance, Cellcom and Super-Sol has led to all kinds of rumors. There are rumors that he made his fortune in an unsavory manner and that he is nothing but a straw man for business interests whose true nature he won’t reveal.
Ben-Moshe's story is so simple it seems to some like it must be complicated: An unfamiliar businessperson arrives here one morning and places 600 million shekels ($171 million) in cash on the table in a bid for IDB. Many don’t see this as making any sense – especially the man who wanted to retain control of the business concern that has become so closely associated with his own name over the past decade, and probably would have been able to retain that control if it weren’t for the unknown businessman, all of 38 years old, who is standing in his way.
The many questions revolving around Ben-Moshe reflect the fact that he did not take the usual path for businesspeople. He spent his high school years at Yeshivat Nehalim, near Petah Tikva, and then enlisted in the army, where he served in a number of nondescript units near Tel Aviv while studying computer programming at night.
It’s easy to understand why the Dankner group is determined to depict Ben-Moshe as a charlatan, since his advance in business seems meteoric enough to raise many doubts. How is it that Ben-Moshe, without the assistance of loans, leveraging or business partners, is able to pour hundreds of millions of shekels into IDB at such a young age?
But since his business activity is backed up by the financial reports of several of his companies and bank verification of his wealth, it’s hard to believe it’s all a charade. It looks like the story of a young Israeli with limitless chutzpah, strong analytic abilities and a sharp business sense that helped him capitalize on opportunities.
After completing his army service, Ben-Moshe enrolled in economics and accounting at Bar-Ilan University but quit his studies in his second year to go into business. He founded the software development company Cyber Gate, which developed billing systems and micropayment solutions; he did the programming himself. The company address is still listed as his parents’ home in Lod.
Ben-Moshe worked in the Israeli market for two years before looking for opportunities abroad and noticing a market failure in Western countries. The high-tech bubble in the late 1990s brought about the rapid development of infrastructure for data transfer, in anticipation of the Internet taking over the world. With the bubble bursting at the beginning of the millennium, the infrastructure in which billions had been invested were left sitting idle.
Ben-Moshe moved to Germany and realized the potential in selling communication services in Western Europe through retail chains using the supply of idle infrastructure. He established a business arrangement with a telecommunications network owned by the Spanish telecom multinational Telefonica, which also operates in Germany. Meanwhile, he bought up communication infrastructure at rock-bottom prices.
Everything Super-Sol isn’t
Colel Store, a chain of six supermarkets, is everything Super-Sol isn’t. The branch in Elad looks like a makeshift operation, with customers pulling products out of the crates in which they arrived from the supplier. Air conditioning ducts hang loose from the ceiling and the two checkout counters seem like they have been placed randomly. Many of the brands aren't available at the large chains, and the store doesn’t accept checks or allow payment by installments. Its business is based on a promise to customers that its prices match the cost from suppliers.
Ben-Moshe, the chain’s owner, is about to take control of Super-Sol. The way he operates Colel Store could shed some light on his approach to business, which can be summed up in one word: discount. His logic is that in pricing things right for consumers while maintaining a good relationship with suppliers, the chain can offer customers bargains and still make a nice profit.
This approach could have a significant effect, not only for Super-Sol but also for Clal Insurance, Cellcom and a long list of other companies run by IDB that could soon fall into Ben-Moshe’s hands. He closely examined all their operations and believes he can have a significant influence on their retail activities.
The possibilities for an IDB run by Ben-Moshe seem even greater after taking a look at the activities of ExtraHolding, the holding company he controls in the German market. The reason Ben-Moshe isn’t known to the Israeli business community in Germany is that it tends to congregate in the same industry and the same geographic region, particularly Berlin’s real estate market. But that's not where Ben-Moshe has been doing business.
At Extra, Ben-Moshe deals with a wide range of products and services, many of which are tangential to the activities of the IDB group. Extra sells insurance of every kind, as well as Internet service, landline and cellular phone service, website design, Internet marketing, network security, search engine optimization, vacation packages and low-cost flights - plus Ben-Moshe’s most important field at the moment: energy. His company offers private customers a service unknown to Israelis: the option of buying energy packages based on their needs.
Insurance is the field in which Extra has experienced the fastest growth and which, with an imminent expansion into Britain, is expected to overtake energy in scope. The group is also in the process of entering the credit card market in cooperation with industry giants like MasterCard.
Extra doesn't directly provide most of the services with which it hooks up its customers, but its operations still require a staff of 1,700 to run them – support, customer service, software and sales – and the company is recruiting more workers at a brisk pace. Ben-Moshe's model is to identify the cheapest suppliers, then act as a broker between them and the end user. To put it simply, he could be called the Rami Levy of the German market.
This model produces narrow profit margins, but Extra is definitely not a huge conglomerate. Its energy operations – the most significant part of its revenues – will finish the year with 80 million euros in profits on 1.7 billion euros in turnover. So while Ben-Moshe might not be putting all his money down on IDB, the 600 million shekels is certainly a very substantial investment for him.
The court’s representatives, institutional investors, and IDB’s private bondholders checked the documentation presented by Ben-Moshe but haven’t independently examined his operations. They haven’t sent private investigators to Germany or carried out due diligence on his businesses.
All the same, Moti Ben-Moshe and his Argentinian partner, Eduardo Elsztain, have won the backing of creditors to gain control of IDB because their bailout proposal requires them to put more cash into the company in the first stage than the rival plan by Nochi Dankner and Ukrainian businessman Alexander Garanovsky.