The Ticker: Trump Move on Jerusalem Stings Shekel on Concerns About Regional Violence

Equital offers to buy up JOEL unit in 2-billion-shekel deal ■ Equital offers to buy up JOEL unit in 2-billion-shekel deal ■ Holmes Place completes institutional tranche of IPO at NIS 230 million valuation ■ Elbit Systems’ shares fall on report Ethiopia misused its spyware ■ Teva, insurance stocks lead Tel Aviv Stock Exchange lower

US President Donald Trump speaks alongside US Vice President Mike Pence about the recognition of Jerusalem as the capital of Israel by the United States in the White House in Washington, DC, December 6, 2017.

Trump move on Jerusalem stings shekel on concerns about regional violence

The shekel weakened 0.6% against the dollar Wednesday amid concerns that U.S. President Donald Trump’s decision to recognize Jerusalem as Israel’s capital could spark regional violence. The currency was fixed at 3.5130 to the dollar. “That definitely was the trigger of the move,” said Lior Faust, head of spot currency trading at Bank Leumi. “Purchases of dollars started with the news about Jerusalem.”  The shekel has been resilient to violence and geopolitical shocks, mainly due to a narrow interest rate gap and strong Israeli economic growth. But U.S. tax reform could lead to faster rate hikes there, while Israeli rates are expected to stay unchanged for at least another year. “At this point of time, people are feeling nervous being long shekel,” Faust said. “I think we might see a squeeze to the upside [for the dollar], and I won’t be surprised to see higher numbers in the next couple of weeks.” (Reuters)

Equital offers to buy up JOEL unit in 2-billion-shekel deal

Equital is offering to buy total control of its JOEL subsidiary in a deal that could reach more than 2 billion shekels ($570 million). The move comes as Equital faces a government-imposed deadline to consolidate its pyramid structure to no more than two tiers of publicly traded companies. Under the plan announced Wednesday, Equital would buy the 48% of JOEL held by the public and delist the company. With only 58 million shekels of cash on its books, Equital would probably finance the purchase by issuing bonds and perhaps equity. To retain their control of Equital, Kobi Maimon and Haim Zuf will offer to the public to buy another 25% of Equital at a cost of some 400 million shekels and boost their stake to 70%.  Equital shares closed 16.4% higher at 92.99 shekels. Shares of JOEL, which has interests in real estate and the Tamar gas field, climbed 7.5% to 197.70 shekels. (Eran Azran) 

Holmes Place completes institutional tranche of IPO at NIS 230 million  valuation

Holmes Place, a nationwide chain of fitness centers, completed the first stage of an initial public offering late Tuesday after agreeing to cut the company’s valuation by close to a third to entice investors.  Investors bought 68 million shekels ($19.4 million) after placing orders for about 100 million shekels of the stock in the institutional tranche of the IPO selling a 30% stake. The IPO values the company at 230 million shekels, slightly higher than the 227 million minimum valuation that had been set by the underwriters, led by Discount Underwriting. The company will be raising several million shekels more in the public tranche later this week. Holmes Place’s investors had hoped to value the company at as much as 350 million shekels but earlier this week were forced to lower it as its biggest investor, the Green Lantern private equity fund, agreed not to sell its shares in the IPO. (Eran Azran)

Elbit Systems’ shares fall on report Ethiopia misused its spyware

Elbit Systems’ shares fell Wednesday after researchers claimed Ethiopia used products made by the company’s Cyberbit unit to spy on dissidents. The report from Toronto-based research institute the Citizen Lab said Ethiopian dissidents were targeted with emails containing sophisticated commercial spyware posing as Adobe Flash updates and PDF plugins.  “Our analysis of the spyware indicates it is a product known as PC Surveillance System, a commercial spyware product ... offered by Cyberbit — an Israel-based cyber security company that is a wholly-owned subsidiary of Elbit Systems — and marketed to intelligence and law enforcement agencies,” the report said. Separately, Elbit Systems said Wednesday it had won a $74 million contract for flight simulators from the Israel Air Force for its upgraded C-130H and C-130J transport aircraft. Shares of Elbit, which had no immediate comment on the Citizen Lab allegations, ended 1.5% lower at 476.60 shekels ($135.59). (Reuters)

Teva, insurance stocks lead Tel Aviv Stock Exchange lower

Tel Aviv shares fell Wednesday, weighed down by Teva Pharmaceuticals and insurance stocks. The TA-35 and TA-125 indexes both declined about 0.8% by the close to 1,448.41 and 1,318.22 points, respectively, on turnover of 1.2 billion shekels ($340 million). Volume leader Teva dropped 2.1% to 51.70 shekels while insurers’ losses were paced by declines of 3.9% to 3.85 by Harel and 3.2% to 24.49 by Migdal. Bank Leumi ended down 1.2% at 19.58. Oil Refineries fell 1% to 1.71 after Leumi Capital Markets lowered its rating on the stock to Market Perform. Bezeq gained 0.4% to end at 5.31 after reporting it was considering a 550-million-shekel offer to buy a facility near the Mesubim junction. Inrom fell 3.8% to 16.04 after the FIMI private equity fund sold two-thirds of its stake in the company at 16.10 a share to institutions for a combined 405 million shekels. Ham-Let was the bigggest loser in the TA-125, sliding 5% to end at 69.89. (Shelly Appelberg)