Business in Brief; Good-government Group Says TASE Privatization Is Sellout to the Banks

Delek Group to issue its first-ever convertible bonds; Harel investments chief quits over pay-cap law; Tel Aviv shares edge lower, Teva takes hit from downgrade.

Stock prices flash on an electronic screen displaying world clocks at the Tel Aviv Stock Exchange (TASE) in Tel Aviv, Israel, on Thursday, Dec. 11, 2014.
Bloomberg

Good-government group says TASE privatization is sellout to the banks

A day before the first of three Knesset votes is scheduled on a bill making the Tel Aviv Stock Exchange a for-profit company, the Movement for Quality Government in Israel said the move would unfairly reward the banks by enabling them to profit from the sale of the shares in the bourse.

The organization said Sunday that for years the banks charged “excessive” trading fees that earned them on average 2.9 billion shekels ($750 million) in annual profits and were due to make more selling TASE shares under the draft law, money the group said belonged in part to the public.

The group said it wasn’t opposed to privatization per se but to its terms. “The bill doesn’t force bourse members to allow new members to join the trading system after the structural changes goes into effect,” it said. “On the contrary, after it becomes a monopoly and a profit-seeking entity, they will have even less interest in allowing new members.” (Assa Sasson)

Delek Group to issue its first-ever convertible bonds

Delek Group plans to issue convertible bonds for the first time ever in an effort to reduce its leveraging.

In a draft prospectus issued Sunday, Yitzhak Tshuva’s holding group said it would issue 400 million shekels ($103.4 million) in two series due in 2.9 years and in five years, but did not specify the terms for converting the debt into equity. Delek’s net debt equals 45% of its assets, which is considered relatively steep.

Delek thinks investors will be attracted to convertibles based on the bullish forecast for its share price after Merrill Lynch Bank of America started coverage of the stock with a Buy recommendation and a target price of 950 shekels, a 20% premium on its 801-shekel closing price Sunday.

Meanwhile, a Delek company said it had nominated a fifth Tshuva relative to a board position. Shareholders will be asked to approve Uri Adler, the husband of Tshuva’s youngest daughter, as a director of Cohen Development. (Eran Azran)

Harel investments chief quits over pay-cap law

Amir Hessel, head of investments at Harel Insurance & Finance, said on Sunday he was stepping down, citing a law capping pay for financial executives.

At least two other top banking and finance executives have done the same since the law was passed in March. Banking sources estimate as many as 100 more may join them, many of them not because of the pay cap per se but rather out of fear the law will affect the severance benefits they have accumulated over the years.

With 15 years at Harel, Hessel earns some 3.6 million shekels ($930,000) a year, far above the 2.5 million shekel ceiling the law sets. Hessel, who manages 170 billion shekels in assets, is expected to set up a privately controlled investment fund, in which Harel said it would likely invest “assuming that it meets needs, policies and management guidelines.” (Assa Sasson)

Tel Aviv shares edge lower; Teva takes hit from downgrade

Tel Aviv shares edged lower Sunday after a brief morning rally faded amid very light trading.

The TA-25 and TA-100 indexes both ended down 0.09%, at 1,459.65 and 1,269.38 points, respectively. Turnover was 472 million shekels ($122 million). Volume leader Teva Pharmaceuticals ended down 1.1% to 208.50 shekels after Standard & Poor’s lowered its credit rating to BBB-minus from BBB ahead of a giant $22 billion debt sale. Biomed shares led the market lower, with Mannkind down 4.1% to 3.88 shekels, Compugen losing 23.2% to 25.05 and Mazor Robotics shedding 2.15 to 38.73.

But insurance stocks were sharply higher, led by gains of 3.9% to 2.25 shekels for Migdal and a 2% advance for Clal Insurance to 41.21. In the fixed-income market, the price of the government’s 10-year Shahar bond dropped 0.22% to raise its yield to 1.66% while the inflation-indexed Galil for the same term declined 0.16% to a yield of 0.18%. (Shelly Appelberg)