New Treasury Director-general Andorn Made Waves in Capital Markets

As head of the giant pension manager Amitim, Yair Lapid’s choice for top treasury set new standards for transparency, debt bailouts and corporate governance.

When private equity firm Hamilton Lane held its annual conference in Israel about a month ago, among those present was Yael Andorn, who at the end of 2011 had finished a seven-year stint as CEO of Amitim, a company managing eight veteran pension funds with combined assets of over NIS 160 billion.

Andorn had just begun as a partner at Plenus Lending Solutions, a unit of the Viola Group, at the start of 2012. At the conference she looked relaxed and smiled and told others in attendance that she enjoyed being out of the spotlight of the media and the capital markets.

Except at the end of last week, the spotlight returned: Finance Minster Yair Lapid’s decision to appoint her as his director-general put Andorn into the center of the kind of attention she never experienced before.

Lapid made up his mind only a few days earlier, after she met with him. Andorn herself was very impressed by the finance minister and his plans, deciding that after refusing several job offers, including from the prime minster himself during his last government, the time had come to accept a top government position.

Andorn, 42, spent 12 years in the ministry’s budget division, including a period from 2004 to 2006 as first deputy director of the division. But the most interesting part of her career is when she was at Amitim, which under her management became one of the first big Israeli investors in foreign equities as part of the firm’s long-term investment strategy, which has since been adopted by other big companies. In addition, Andorn has sought to improve the transparency in the capital markets and corporate governance.

‘Better place for small investors’

In an interview with TheMarker in August 2008, she made a statement of principles that Amitim had drawn up for its members, saying the goal was “to turn the capital market into a better place for minority small investors.” She sought to compare Amitim with Calpers, the giant California public pension manager, which operates according to strict standards of transparency and the investing public’s interest as well as for the high standards it holds for the companies it invests in.

Regarding Amitim, she said she would oppose corporate governance situations where the chairman and CEO of a company were the same person, and insist on ceilings for share options programs for senior managers. Later she established lines for corporate bailouts, such as requiring controlling shareholders to inject their own money into the failing company, stronger collateral, higher interest rates for creditors and other conditions.

Saying that Amitim had no conflicts of interests because it was not part of any business group, she said she could lead the fight for shareholder and creditor rights. “It’s the right thing for our members, and other groups will join us, slowly,” she said. “It’s a process that takes time but every group that adopts these principles will help improve the capital market.”

As part of this strategy, Andorn pursued Nathan Hetz, a real estate magnate and chairman of Amot Investments, which is controlled by his Alony Hetz group.

Amitim had bought bonds in Amot, but Andorn was bothered that Amot had weakened its balance sheet by paying out a giant NIS 426 million dividend at the end of 2008.

“It is not clear to us how, during a global liquidity crisis, the board approves [such large] withdrawals from the company’s cash holdings, which are supposed to serve as a means of repaying debt and developing the business,” she wrote in a letter. “I am turning to you as chairman with the demand that you stop the dividend payout.”

Because Amitim is entitled to invest a good part of its portfolio in non-tradable government bonds, with relatively low risk profiles, Amitim has not been ensnared in the tycoon bailouts of the last few years. The only major example was its holding of bonds in Zim Integrated Shipping Services, where it helped arrange a relatively fair rescheduling of $390 million in debt four years ago.

Infrastructure financing

Andorn also led a series of equity investments amounting to more than NIS 1.5 billion, among them hundreds of millions of shekels in Azrieli Group, Bezeq and Route 6. In addition, Amitim took an active role in financing infrastructure projects like Dorad, OPC and Dalia Energy and became a major player in the non-banking lending segment.

Today she is leading a strategy of buying banks’ credit portfolios as they seek to meet tougher regulatory standards.

At Viola, Andorn has made several deals in the areas of solar energy and technology, but has not been involved in the biggest credit transaction the group is now undertaking − a NIS 250 million loan to Ilan Ben-Dov’s Suny and Scailex companies.

In addition, Andorn is a director on the boards of El Al Airlines and Oil Refineries Ltd. When she assumes her new role at the treasury she will resign the posts and recuse herself if any conflict-of-interest issues arise for her as director-general. Because her husband, Ofer Karnim, is the chief financial officer of the Dan bus cooperative, she will not take part in discussions on public transportation issues.

Ofer Vaknin