The owner of the Eliahu group, Shlomo Eliahu, yesterday sold 6.6 percent of The Israel Phoenix Assurance Company shares in his possession to the Swiss investment bank, UBS Warburg, for NIS 148.5 million.

Eliahu sold around 11 million shares at an average price of NIS 13.53 per share, and is now left holding a 32.5-percent stake in The Israel Phoenix. The sale took place some two weeks after a failed attempt by Eliahu to sell the same share package via Clal Underwriters for NIS 14 per share.

The Israel Phoenix share lost 3.97 percent yesterday, and ended the day's trading at a price of NIS 14.26. The Eliahu group's investment manager, Israel Eliahu, said that the deal had not constituted a drop in price as toward the end of the tender some two weeks ago, the The Israel Phoenix share price had dropped to around NIS 13.5, but the group had been unable to close the sale.

"UBS approached us and were more serious. They said they wanted to but the shares and they did," Israel Eliahu said. "As far as I understand, they purchased a portion of the shares for themselves, a portion for their foreign clients, and also for two institutional bodies in Israel."

He added that the deal was a sale for all intents and purposes and that the parties had not struck a deal under which if UBS was unable to sell off the shares, Eliahu would be asked to buy them back.

Capital market sources said yesterday that UBS and Eliahu had been in contact over the past few days and that the bank had purchased a very large portion of the shares - 50-80 percent - for its nostro account and not for other clients.

"We are talking about a negligible sum for bank of that size; they don't even feel it," an investment manager at an institutional body said.

One of the main reasons for Eliahu's decision to sell off the share package was that Israel Phoenix shares are poorly tradable. Because the owner of the assurance company, the Shahar-Kaz group, holds some 58 percent of The Israel Phoenix stock, trade in the shares before the sale was down to zero. Now, with some 10 percent of the assurance company's shares on the market, the stock is likely to be traded on the Maof index.

"The Phoenix's entrance into the Maof index will lead to a rise in the price of the share in the short term," a senior executive in the insurance industry said yesterday.

Capital market sources estimated that although The Israel Phoenix share was trading at a higher price-earnings ratio than the rest of the insurance companies in the industry, the fact that it would be entering the Maof index would require Maof-based funds to purchase the company's shares, hence causing the stock price to climb.