Taking Stock / Riding in Style

Ever heard of Israel Stockman?

No? That's okay, he was doing perfectly well without your learning of his existence. In fact, if it were up to him, you still wouldn't have heard of him.

But last week, he was sued for NIS 5 million at the Tel Aviv District Court. The case exposed not only him, but also the impressive business in which he held shares, until recently.

Said Stockman was a minority shareholder in Colmobil, which imports cars, commercial vehicles, trucks and buses. It imports from Mercedes Benz, Mitsubishi and Hyundai.

For decades, Stockman had been a partner of the father of Dr. Shmuel Harlap, who chairs Colmobil today.

Four years ago, Stockman decided to sell his 11.23 percent interest in Colmobil, and entered negotiations. According to the lawsuit filed by the company's former chief financial officer, Hanan Koffler, Stockman hired him to handle the deal.

Koffler claimed that after the deal had been closed, Stockman never paid him his fee. He had been promised a million dollars, but Stockman's son Elad suggested he agree to accept only $220,000. Hence the lawsuit.

But the really interesting part of this whole sorry affair is the sum Koffler claimed Stockman received for his shares - $32 million.

Do the math. $32 million for 11.23 percent of Colmobil prices the company at $285 million, or in shekels, NIS 1.3 billion.

Eye-popping value

That valuation is all the more astonishing when you consider that Stockman was a minority shareholder in a privately-held company, and that the deal was closed in June 2003, before Israel's capital market started to rebound.

For the sake of comparison, in June 2003, Delek Automotive was trading at a company value of $360 million, and today it's worth $640 million. We may assume that Colmobil's value also climbed in that time.

Gil Agmon, the chief executive of Delek Automotive, which imports Mazdas and Fords, is the one who makes headlines. But the main reason for that is that Delek Automotive is traded on the Tel Aviv Stock Exchange. It publishes financial statements, and is controlled by a man very much in the news, Yitzhak Tshuva.

But Agmon and Tshuva are not alone - they are just two of the stars in an industry that has created 10 of the richest families and business groups in Israel. Yes, the car importers.

Heard of George?

Have you heard of George Horesh? Not unless you're in the car business, probably. Most other businessmen would probably scratch their heads - hmm, Horesh, heard that name somewhere, now what does he do?

Car industry people know what he does. When he isn't managing his business, he's sitting at his Herzliya Pituach home reading books on philosophy and listening to music. Meanwhile, his Toyota importing agency is purring along beautifully.

It, too, is a privately-held company that does not publish financial statements, but industry sources believe it netted between NIS 200 million to NIS 300 million a year from importing the most popular cars in the world.

Delek Automotive imports the most popular car in Israel, the Mazda. But the agencies Horesh and Harlap run also import trucks and jeeps. Every year, more and more Israelis are prepared to fork over a quarter-million shekels or more to buy a Toyota Land Cruiser or something of its ilk, where the margins are far higher.

For Horesh, the Toyota dealership is just part of his portfolio, which is apparently diversified around the globe. He's well placed in TheMarker list of Israel's 500 richest people, with personal wealth estimated at about a billion dollars.

By the way, Harlap is also interested in philosophy. In fact, he has a doctorate on the subject and specializes in Plato. Apparently that shows that when you have a company ticking over at a rate of several hundred million a year, you can afford to be philosophical, even Platonic.

Horesh, Harlap, Tshuva - brilliant businessmen one and all, who didn't find their billions by chance. Yet there is something depressing about the thought that the best business in Israel 2004 is a car importing agency.

No offense, but...

Don't take offense, car importers, but your industry is hardly the stuff of technological brilliance; what it takes is mainly to wrest a good price from the manufacturer, jack it up as much as possible when selling the car onward, and get as many cars as possible onto the roads. And then sell spare parts for a small fortune over the years.

When Nochi Dankner was looking for a partner to buy IDB Holding with him, he finally took on board the Livnat family, which among other things imports Daf trucks. When Yossi Hackmey wanted to sell The Israel Phoenix Assurance Company, he found Israel Kass and Jacob Shachar, who import Volvo and Honda. When Shmuel Dankner wanted to sell Dankner Investment, he found Tshuva, who made his money from importing Mazdas.

In short, this is the deal. Within a few years, we'll be identifying Israel's biggest companies by the car dealerships: this one belongs to the importer of Peugeot, that one to the Mercedes guy, and the one over there to Volkswagen's importer.

So next time you want to buy a bank or huge communications empire, and you're looking for somebody with deep pockets, start on grimy old Hamasger Street, where the sparkling dealerships are lined up. And if you're looking for rather less, say $32 million, you could start with Stockman.