Taking Stock / The Tshuva Moves

They say he has incredible luck.

For 40 years, people dug and drilled in the land and sea of the region searching for oil. He stumbled across the biggest natural gas field ever found in Israeli history right in Delek's back yard, two years after buying the company.

For 10 years, the "refining margin" that determines profit in the oil refining business had ranged from $3 to $6. Two months after he bought the Texan refinery La Gloria, the margin zoomed beyond $10.

Ford had been considered quite a dead horse in the car business, until he upped and bought the franchise to import the cars to Israel. Within a year the Ford Focus became one of the best-selling cars in the Holy Land.

Others say it isn't luck at all, it's amazing intuition. Not one of New York's real estate moguls ever thought of turning the landmark Plaza Hotel into a luxury condo, until he came along, wrote a check for a Saudi prince, and took the project by the horns.

Ten years ago, while Israel's real estate warriors were duking it out in our pitiful little backwater, he was investing billions in Canada, New York, Miami and London. It was just the start of his business boom.

And some claim it's all a matter of his extraordinary personal charisma. He connects with people, keeps a low profile and mainly, knows how to laugh at himself, his truncated speech, his vocabulary, and at the end of the day, he says he'd be satisfied with the NIS 100 his wife gives him when he leaves the house in the morning.

But there is another factor, no less important, that transformed Yitzhak Tshuva from a middling real estate developer in Netanya into one of the three richest Israelis in the world, and into one of the world's biggest real estate developers. He always settles for just 95 percent.

There he goes again

On Thursday, Tshuva yet again, as usual, took corporate Israel by shock, this time by sending the U.S. Securities and Exchange Commission a draft prospectus for his U.S. company Delek Holdings, to raise a quarter-billion dollars at a company value that may reach a billion dollars. Or, in the range of $900 million to $1.1 billion.

Beyond phenomenal growth, high profitability and stated expectations that the company's value will grow tenfold inside two years, the prospectus reveals another tantalizing tidbit: its chief executive, Uzi Yemen, owns options for 5 percent of Delek Holdings' stock, at the price of the company's shareholders' equity. Meaning, a 10th of its IPO valuation. Meaning, the day the company goes public, Yemen will own stock worth - oh about NIS 150 million.

A glance at his resume shows Yemen joined the Tshuva group just six years ago, as a book-keeper. Two years ago he took over as chief executive of the American company.

Is that right? Could it be? Tshuva gave him a 5 percent stake in the company without understanding how much it was worth, perhaps?

No and no. If you've watched his moves, then you realize - it's his strategy. Give your managers a cut of the profit, a big cut. Make them rich and they'll make you 20 times as rich.

Gil Agmon had been on salary, a VP at Delek Automotive, when that was a member of the IDB group. When promoting Agmon to CEO, Tshuva gave him options for 10 percent of Delek Automotive.

P.S. In the last five years, Delek Automotive has generated dividends of more than a billion shekels.

Hillel (Ilik) Rozanski had been a manager in the Dankner group. Tshuva made him manager of Delek Real Estate and gave him 5 percent of the company's stock. Rozanski built Delek Real Estate from scratch into a $700 million operation inside six years.

The usual cut

Miki Naftali received the same lesson regarding Tshuva's real estate business in New York and Florida. A young accountant named Udi Erez, in his 30s, no more, got the usual cut of Tshuva's property business in Canada.

If Tshuva floats his real estate business, we will find out exactly how many billions Naftali and Erez generated for him inside a few years, while turning into multimillionaires themselves.

Ask Tshuva why he gives his managers 5 percent of each company, and he laughs: because in today's business world, it's all the management. The managers. I don't manage the companies and I don't try to, either, he says: my job is to find the talent, help them and make them rich. They do their 5 percent, I do my 95 percent and that's enough for me.

That's it? So simple, that one's immediate reaction is, that's no way to do business! It's Tshuva's money, it's his contacts, it's his initiative, he's the Man, he's the owner, and Agmon, Yemen, Rozanski, Naftali and Erez are his hired minions.

But just look at the results and think again. Maybe one shouldn't argue with Tshuva's method. Maybe one should just learn it.