Business in Brief / Israeli Reforms Would Cut at Least 35% From Bank Shares’ Value

Securities offerings jumped threefold in first quarter; Auditors attached 'going concern' warning on WTP; Energy shares lead Tel Aviv stocks up for second day.

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Moshe Kahlon, head of the Kulanu party, speaks during a conference in Tel Aviv March 11, 2015.Credit: Reuters

Reforms would cut at least 35% from bank shares’ value

The banking reform that Finance Minister-designate Moshe Kahlon is mulling would wipe out at least 35% from the value of Israeli bank shares, a preliminary estimate by consulting firm Fair Value Group said yesterday. That would mean paper losses of 20 billion shekels ($5.1 billion) for the investing public and 5 billion shekels for controlling shareholders, assuming the banks’ net earnings fall 25%. CEO Eli Elal said the reform measures would likely contain at least three elements – supervision of fees and charges; the entry of new competitors to the market; and/or separating the banks’ operation into competing units. If reforms end up cutting banks’ net profit by 50%, it would lead to a 50% reduction in the banks’ shareholders equity (or 39 billion shekels). The Bank Shares index would lose 60% of its value, Elal estimated. (Asa Sasson)

Securities offerings jumped threefold in first quarter

The Tel Aviv Stock Exchange saw some 19 billion shekels ($4.9 billion) in new stock and bond issues in the first quarter, a threefold increase over the same time in 2014, figures compiled by Rosario Capital and obtained by TheMarker show. More than 90% of the money was raised in bond issues, and 8.3 billion shekels of that was by the banks. But even after excluding the banks, new debt issues doubled from a year ago, as record low interest rates encouraged companies to borrow. Equity offers also doubled to 1.5 billion shekels. The TASE saw no initial public offerings, but nine companies raised 660 million shekels in secondary offerings and five raised 829 million shekels of rights offering, according to Rosario. “We saw high levels of fundraising in the debt market, but the equities market also completed big and successful offerings, which testifies to the appetite of institutions to increase their stakes in big and profitable companies,” said Ranen Cohen-Orgad, CEO of Leader Capital Markets. (Eran Azran)

Auditors attached ‘going concern’ warning on WTP

Auditors of WTP, a company with an innovative waste-recycling technology, attached a “going concern” warning on the company’s 2014 annual report after it reported a 8.4 million shekel ($2.2 million) loss on revenues of just 64,000 shekels. “We received none of the necessary clarifications concerning the ability of the controlling shareholders to provide the capital needed for current operations,” said accounting firm Kost Forer Gabbay & Kasierer. “These considerations, and others, have created serious doubts about the company’s continuing as a going concern.” WTP began trading on the Tel Aviv Stock Exchange 14 months ago after buying a shell listing, and its share price jumped 500% to a market value of 230 million shekels at the end of 2014. Since then, the stock has fallen 42%. Amir Bramly, who, with his partner Avner Arazi, have promised to inject 15 million shekels into WTP within the year, was arrested two weeks ago by the Securities Authority on suspicions related to his Kela investment fund. (Omri Zerachovitz)

Energy shares lead Tel Aviv stocks up for second day

The Tel Aviv Stock Exchange’s TA-25 index marked its seventh straight day of gains, setting a new record yesterday amid very light holiday trading. The benchmark index rose 0.1% to end at 1,643.93 points, while the TA-100 rose 0.3% to 1,437.25. However, turnover was just 485 million shekels ($124 million) for the short trading day. Energy shares led the market higher for a second day, with INOC-Dead Sea Ltd Partnership jumping 6.2% (after climbing 4.9% the day before) to end at 25.90 shekels. JOEL rose 3.6% to 145.40, while Ratio climbed 3.2% to 36 agorot and Avner 1.2% to 2.94, the latter two in unusually heavy trading. Technology shares were one of the only sectors to end lower, with Ormat Technologies ending down 2.4% at 148.20 shekels. Polyram, a maker of thermoplastic compounds, soared 12.5% to 40.24 shekels after it reported receiving competing buyout offers from the private equity funds FIMI and Tene. In foreign currency trading, the dollar fell 0.45% to a Bank of Israel rate of 3.9560 shekels. (Dror Reich)