Li Haifeng Group Drops Out of Clal Bidding

Asa Sasson and Michael Rochvarger
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Li Haifeng
Li HaifengCredit: Alon Ron
Asa Sasson and Michael Rochvarger

The race to buy control of Clal Insurance, Israel’s second biggest insurer, narrowed to two bidders on Monday after the JT Capital-Tianan group said it was dropping out. At the same time Fosun International’s proposed acquisition of a second insurance firm, Phoenix, looked increasingly in trouble.

The JT Capital Tianan group, which includes the Hong Kong tycoon Li Haifeng and Tianan Property Insurance, said it pulled out of the bidding for Clal after failing to reach an agreement with Israeli regulators on which of the partners would actual receive the license to control an insurance company in the event the group won.

Still, IDB Development Corporation, the holding company that is selling its 55% controlling stake in Clal, told the Tel Aviv Stock Exchange on Monday that an investor group led by Harel Locker, former director general of Prime Minister Benjamin Netanyahu’s office, was firmly in the bidding process.

The group, which comprises Shanghai Gongbao Business Consulting and a Chinese government investment fund Urban Transportation Investments, after it restructured itself at the behest of regulators.

The Locker-led group is made what is probably the higest of the two bids for Clal – 2.627 billion shekels (about $674 million), a figure that is likely to rise to 2.7 billion after interest the group pays while it waits for the acquisition to close. The second group, which is led by China’s Microlink, has offered 2.48 billion shekels, but that offer would change depending on Clal’s shareholder’s equity at the end of the year.

Shares of Clal closed up 1.2% to 49.41 shekels. Shares of IDB gained 1.8% to 1.87.

Meanwhile, however, an agreement in principle by China’s Fosun to buy Phoenix looked increasingly in trouble amid concern about the status of its founder and chairman, Guo Guangchang, who was detained this month by Chinese authorities in connection with an unspecified investigation.

The probe has shaken confidence in the company, which Britain’s Financial Times reported on Monday had withdrawn its offer for wealth management group BHF Kleinwort Benson.

In Israel, the Movement for Quality Government in Israel called on authorities to block the sale of a controlling share in Phoenix to Fosun. The Chinese conglomerate agreed to pay Yitzhak Tshuva’s Delek Group 1.8 billion shekels for a controlling 52% stake in the insurer, but is awaiting government approval.

Nili Even-Chen, an attorney for the non-profit organization, said Delek’s Phoenix stake should be sold through a public offering, which would better serve the public interest than a sale between controlling shareholders.

“The main danger, from the movement’s point of view, that emerges from this deal is the transfer of control to a single controlling shareholder, and not just any shareholder, whether foreign or local, but a controlling shareholder suspected of criminal activity,” Even-Chen said.

Phoenix shares finished down 1.1% at 8.47 shekels.

Correction: An earlier version of this article incorrectly stated that the proposed acquisition of the insurance firm Harel was in trouble. The firm in question is in Phoenix.