Eduardo Elsztain: I'm Disappointed That My Contributions to Israel Have Been Undervalued

IDB Group's controlling shareholder says he’s satisfied with progress four years after his first investment in group.

Daniel Bar On

Marking four years since he first invested in the IDB Group, Argentinian businessman Eduardo Elsztain, expressed both satisfaction with the conglomerate he controls but disappointment with the regulatory reception he has received.

“After investing in Israel 2.5 billion shekels ($670 million) in the economy, I have to share with you that I am somewhat disappointed ...and [feel] not been appreciated,” Elsztain told a news conference in Tel Aviv. “We would like this to be recognized – [for] the four years that we have been improving, and improving and improving.”

Nevertheless, he said the financial markets have shown confidence in the group by bidding up the shares for IDB Development and its group companies and supporting a sale of debt by the group.

Although he has lost 2 billion shekels of his investment, Elsztain said he remained a big believer in investing in Israel and said he was invested in the country for the long term. Elsztain is controlling shareholder of IDB Development Corporation, which sits at the apex of a group of companies that includes Clal Insurance, cellular operator Cellcom Israel and food retailer Super-Sol.

IDB Development shares ended down 0.5% on Wednesday at 87 agorot, but the price has more than tripled from 26 agorot four years ago, including a 25% rise so far this year.

The press conference comes at a critical time for IDB, which is in a dispute with Dorit Salinger, the treasury commissioner of insurance and savings division, over its 55%-owned Clal Insurance stake.

Salinger has denied IDB a license to own an insurance company and insists it sell Clal Insurance shares on the stock market in blocks of 5%.

Elsztain said on Wednesday he has appointed JPMorgan to find a buyer for the group’s subsidiary Clal Insurance following two failed attempts by IDB to sell its stake in Clal to Chinese investors.

Elsztain noted that over the past years IDB had invested much money with the goal of selling the company. “We can’t as controlling shareholders sell it without a profit. The one thing we are asking is that they don’t force us to sell at a loss of a billion shekels,” Elsztain said.

Asked if he would consider suing Salinger, Elsztain said he didn’t believe in lawsuits against regulators. “That’s how we do business all around the world,” he said. He defended the aborted sales to Chinese investors, which had raised concerns among regulators, saying they believed in Israel, which is why they wanted to buy Clal.

Elsztain acquired the heavily indebted group from the fallen tycoon Nochi Dankner when it was structured as a six-layer pyramid with one holding company controlling another and had 16 billion shekels in debt.

Under Elsztain, the group has since been reduced to two layers of publicly traded companies with IDB Development owning 76% of Discount Investment Corporation, which in turn holds Cellcom, Super-Sol and other companies. IDB and Discount combined now have debt of 5.6 billion shekels.

“Hopefully in a year’s time we will only have one level,” said Elsztain.