IDB’s Moti Ben-Moshe Goes Public

In an interview with TheMarker, the new co-owner of Israel's largest conglomerate explains why he’s risking hundreds of millions of shekels on the debt-ridden enterprise.

Ofer Vaknin

“We’re having a hard time understanding him.” “He has a great deal of self-confidence on the one hand, but lacks confidence in other areas.” “He’s very hard to work with; he’s a control freak who doesn’t trust anyone but himself.” “He and Elsztain will not last long together. They hardly speak to one another. It seems that’s why Haim Gabrieli is staying in IDB — because he knows how to compromise and mediate between them.” “He’s a brilliant man who’s phenomenal with numbers, but IDB is too big for him. He gets into the details too much.”

The statements above were made by people both in IDB Group and outside it when we asked them for their impressions of Moti Ben-Moshe, who together with the Argentinian businessman Eduardo Elsztain, acquired the giant holding company earlier this year.

Of course, these statements must be treated with caution. Some are from people with axes to grind, or who were harmed by Ben-Moshe, or didn’t get something they wanted from him. Even after a three-hour interview with Ben-Moshe, it is a challenge for us to consolidate an opinion of him.

Is he brilliant? It appears so. Is he good with numbers? Absolutely. During the conversation, he pulls out the gross margin for IDB’s Supersol supermarket chain from three quarters ago and interprets the EBITDA data of the agrochemicals maker Adama and its effect on the company’s future value in various scenarios.

Is he hard to work with? Maybe. Ben-Moshe does not seem like a man of small talk or idle conversation. “I get many invitations to social events, but I didn’t go to any of them,” he says almost proudly. “That’s not why I came here. I came to work.”

While Elsztain, his partner in IDB, found time to watch Argentina play in the World Cup finals, Ben-Moshe chose to go through IDB’s numbers. “I don’t make decisions from an ivory tower,” he says. “My decisions affect many people, and I want to understand the data completely before I make them.”

Too much self-confidence? Too little? Both these things are true to an extent. Ben-Moshe still lacks confidence in dealing with the public. The interview with him was arranged hastily, almost from one day to the next, in a style that is highly unusual for people at the top of the Israeli business establishment.

It was clear that he wanted to say more than he did. Quite a few times he began a sentence and then retracted it, saying, “I would say more, but it’s better that I stop here.”

Modest? Arrogant? A little of both. Ben-Moshe’s lifestyle is not at all reminiscent of people of his status. The offices of Extra Holding in Germany, where he made his fortune, look like one big call center. He has made his home in middle class Modi’in.

Elsztain and Ben-Moshe are still together. Their “wedding,” which came about as a hostile takeover of the empire Nochi Dankner left behind, was an expensive one. Together they have invested 1.2 billion shekels ($340 million) in it so far and will be putting about 500 million more shekels in it this year. At this stage, a divorce would be very costly for both of them.

Ben-Moshe is a hard nut to crack. He does not fit into any of the familiar molds. He fends off questions about himself and his family quickly and graciously. He finds personal exposure uncomfortable. Still, one cannot help but admire his success in business, which especially in a country whose language he does not speak and whose culture is foreign to him. Apparently, he can see things that others cannot.

It is also hard not to admire his courage in facing Dankner and competing for control over IDB against all odds. He did something that other businesspeople in Israel had not dared to do — something that could be done only by someone from outside the local business community. It is also worth noting that so far, Ben-Moshe has met all his financial commitments to IDB, and that the attempts to find any skeletons in his closet, including hiring private investigators, yielded nothing.

His proposed plan for making use of the natural-gas reserves discovered in Israel in recent years is evidence of his ability to think outside the box. “I think it’s a mistake to build a natural-gas liquefaction plant to export it abroad,” he says. “It’s extremely costly — billions of dollars. Instead of liquefying the natural gas and transporting it thousands of kilometers away from here, it would be better to build many small power stations in Israel and sell the electricity to customers abroad. That’s what France does — it uses its nuclear power plants to sell electricity to Britain.”

How has your life changed over the past year?

“Nobody knew who I was nine months ago. Today I can’t leave my home without someone spotting me. Many people stop me on the street and wish me success. It’s very embarrassing for me. I didn’t acquire IDB to get publicity. I get many invitations to social events, but I haven’t gone to any of them. I invested in IDB because the concern has business potential.”

What surprised you during the acquisition?

“I never believed I would have to deal with the dirty war that Nochi Dankner waged against me. I never expected that. The stories that were told about me reached a level that had never been seen in Israel. But I must say that as an entrepreneur, I’m not at all happy to see a person like Dankner fall from the heights he reached. You may find this surprising, but I wish him success.”

Were you willing to pay the necessary personal price for contending for IDB? You weren’t mistaken in your assessments?

“I don’t think I made a mistake. Yes, the personal price has been high, but my family — my wife and children — are dealing with it amazingly well. Those who know me could spot the lies that were published.”

Based on IDB market capitalization, you and Elsztain have lost about half a billion shekels so far. Does that bother you? Could it be, as people in the market claim, that you gambled on the transaction for reasons of ego and paid too much?

“The calculation you’re making is technical and suitable for a financial investor. I came to IDB for the long haul. I intend to stay there for the next 20 to 30 years, and maybe pass it on to my children in the future. The value that I see in it is much higher than the value at which I acquired it or at which it is traded on the stock market. Almost all the companies it holds are worth more than the value at which they are traded on the market. The problem is that IDB is built like a pyramid on top of a pyramid, and is highly leveraged. This will change, and be reduced.

“I wouldn’t have invested 1.2 billion shekels with my partner in a concern that I felt should be closed. Even when we were in the process of buying it, we knew that we would have to invest more money in the future, and we said so. That is also one of the reasons why the banks chose us. I think that the [group] companies are worth much more. That’s my point of view. Only time will tell if I was right or the market was. If the market understood everything I’m doing, other people would have done it, too.”

At the time you made your bid, you were looking at IDB from the outside. Now you know it from within, and you speak with the companies’ managers. How has that changed your perspective?

“I knew quite a bit about IDB even before the acquisition. My assessments turned out to be quite decent after the fact. Now that I know much more, I’m very happy with the investment I made.”

How much do you expect to profit?

“Some people think I’m out of my mind, also because of the businesses I established abroad. But I see myself as an entrepreneur and I’m very optimistic. My estimate is that within four to five years, the average annual yield on the investment will be more than 15%.”

So far, you have only done business in Germany and in Britain. How does it feel to be back home?

“The support I get here is amazing,” Ben-Moshe says with a cynical smile.

So what drew you to do business in Israel, of all places?

“I felt I could create a revolution here and that I could exert a good influence on lowering the cost of living for Israeli citizens. I’ve been successful in doing that abroad, and there is no reason why I shouldn’t succeed in Israel, too. All that’s required is the right technological platform to give consumers purchasing power in the fields of communications, finance and maybe in energy as well.”