The initial public offering of Bank Hapoalim’s Isracard credit card subsidiary drew huge demand on Wednesday, with orders totaling 2.5 billion shekels ($690 million) in the institutional tranche of the sale.
The bank’s board was meeting late on Wednesday to make a final decision on how much of Isracard to sell amid the investor appetite and ahead of the public tranche of the IPO next week. Sources estimated Hapoalim would sell 60% of Isracard at a valuation of between 2.45 billion and 2.65 billion shekels after taking into account the 2.5% discount being offered in the institutional tranche.
Although that is higher than the 2.5 billion shekel minimum called for in the Isracard prospectus, it is lower than the 3.1 billion the Entropy financial research firm valued Isracard a day earlier. It is also a lower valuation than Bank Leumi sold its Leumicard unit to the U.S. private equity firm Warburg Pincus earlier this year – 1.13-1.2 to book versus 1.37.
Isracard is Israel’s largest credit card issuer, with annual turnover of 155 billion shekels and a 45% market share. Hapoalim and Leumi are under government orders to sell their credit card businesses by 2020, meaning Hapoalim will have to sell more shares this year.
The IPO not only drew interest from institutions but from big name private investors, including Alfred Akirov and George Horesh.