WeWork’s $20b Value Not Justified, Financial Times Analysis Suggests

Business in Brief | Psagot management bars staff from returning to work after they protest ■ FIMI’s sale of 25.5% stake sends shares of Overseas Commerce higher ■ Phoenix Holdings to acquire 25% stake in Acro Real Estate

FILE PHOTO: A guest attends the opening ceremony of WeWork Hong Kong flagship location in Hong Kong, China February 23, 2017.
\ Bobby Yip/ REUTERS

Psagot management bars staff from returning to work after they protest

About 50 unionized employees of Tel Aviv’s Psagot Investment House returned from a one-hour demonstration outside the building Wednesday to discover their computer access had been blocked. The workers were protesting what they say is the prolonged duration of negotiations with management — 18 months. Management said the day will count as a vacation day for the demonstrators, who are represented by the Koach LaOvdim union. The company said Psagot, Israel’s largest investment house, would not accept partial work performance. Workers’ committee head Shlomi Lugasi said the protest was limited to an hour to minimize harm to clients. One issue in the negotiations is the lack of a raise for the past four years. Management wants to link wages to profits. Psagot said the office functioned as usual Wednesday, “excepting delays of telephone services.” Clients who used email or Facebook received full service, the firm said, adding that it respects the right to strike, but not “illegitimate and illegal activities that are not within the framework of the worker’s right to strike.” (Assa Sasson)

FIMI’s sale of 25.5% stake sends shares of Overseas Commerce higher

First Israel Mezzanine Investors announced Wednesday the sale of its controlling stake in Overseas Commerce at a 27% premium over its traded share price, boosting Overseas Commerce’s stock’s price on the Tel Aviv Stock Exchange 4.8% to 5.56 shekels ($1.52). FIMI sold its 25.5% investment to Emilia Development for 96 million shekels, reflecting a price per share of 6.83 shekels, the price at which Overseas shares were issued at the end of 2016. In addition, FIMI has realized a 100% gain on its investment since it acquired control of the company in 2013, buying it for about $30 million and selling it for $60 million. Overseas Commerce manages freight and container terminals on freight subject to customs authorities as well other warehouse facilities and also sells logistical services. Overseas got into the logistical services business in May targeting shipment of online merchandise orders. (Guy Erez) 

WeWork’s $20 billion value not justified, Financial Times analysis suggests

WeWork, the global shared office space firm co-founded by Israeli Adam Neumann, is one of the world’s 10 largest startups, based on its last funding round valuing it at $20 billion even before turning a profit. The Financial Times published an analysis this week, however, claiming that its true value is less than a fifth of that. “If expansion continues at the current aggressive pace, net losses will persist. WeWork’s steep valuation depends on a blinkered faith in its originality despite a crowded market of competitors. If the company’s equity value was based on the same multiple of sales as flexible workspace peer IWG (formerly Regus) it would be worth less than $3bn. The company’s pitch is scale,” the FT analysis stated. Many observers believe that WeWork, which has 73 locations around the world, will pursue an initial public stock offering at some point, but the Financial Times analysis asserted that “a successful initial public offering will require WeWork to convince investors that its value is based on more than giddy markets and a millennial-friendly aesthetic.” (TheMarker and News Services)

Phoenix Holdings to acquire 25% stake in Acro Real Estate 

The Phoenix Holdings insurance group and Acro Real Estate announced Wednesday that they had signed a cooperation agreement through which Phoenix will buy a 25% stake in Herzliya-based Acro at a company of about 450 million shekels after the new injection of funds. Founded in 2006, Acro is a real estate development firm involved in both residential and commercial properties, mostly in Tel Aviv and Herzliya, but also municipal and industrial effluent treatment, hazardous and household waste disposal and energy.  Its flagship development is the Da Vinci, at the corner of Kaplan and Da Vinci Streets in Tel Aviv, featuring two 42-story apartment towers in addition to commercial and office space. Overseas it is active in the New York real estate market. Zahi Arabov has a 60% stake in the company and serves as its chairman. Beyond its direct investment in Acro, which provided an alternative for the real estate firm to an initial public offering, Phoenix intends to collaborate with the company to expand its real estate activity. (Eran Azran)

Corporate bonds down, stock trading thin in advance of U.S. July 4 holiday 

Corporate bonds suffered relatively sharp declines in July 4 trading on the Tel Aviv Stock Exchange, but perhaps the closure of U.S. financial markets Wednesday in observance of Independence Day led to the exceedingly thin stock trading in Tel Aviv of just 471 million shekels ($129 million). The Tel Bond-20 and Tel Bond-60 indexes both dropped 0.3% on the day, to 343.58 and 333.52 points respectively, while Super-Sol bonds, for example, were off a full 1%. IDB Development’s Series Tet bonds closed off 3.9% to 86 agorot. (TheMarker)