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Abu Dhabi's government fund acquires controlling stake in Israel's largest insurance company

This is the second agreement reached by the Abu Dhabi government as it continues to seek economic opportunities in Israel

Skyscrapers in Abu Dhabi, United Arab Emirates (Photo: Shutterstock)

A significant event took place on Tuesday as Abu Dhabi's government-owned Development Holding Company (ADQ) agreed to purchase a controlling stake in Israel's largest insurance company, Phoenix (TASE: PHOE).

ADQ is expected to pay $680M to the current shareholders, US investment firms Centerbridge and Gallatin Point Capital. The deal gives Phoenix a value of $2.7B.

A memorandum of understanding was finally inked after several months of negotiations.

The controlling 32.5% stake of Phoenix was acquired by the US investment funds Centerbridge and Gallatin Point back in late 2019 from Israeli tycoon Yitzhak Tshuva's Delek Group. The deal was valued at NIS 1.6 B at the time and the market value of Phoenix was NIS 4.5B. Essentially, their holding has more than doubled in value since then, giving the two funds 100% profit on their investment.

Though the transaction must yet be scrutinised by Israeli authorities, there is a strong likelihood it will be approved. Phoenix handles assets worth NIS 364B and, therefore, the regulatory side of finalising the deal will be fairly stringent.

This is the second agreement reached by the Abu Dhabi government as it continues to seek economic opportunities in Israel. Mubadala Petroleum, a state-owned company, was granted permission last year to acquire a 22% stake in the Tamar offshore gas field from Delek Drilling Limited Partnership.

ADQ was founded in 2018 as a holding company for government assets, and since then it has been consolidating its portfolio, making selective acquisitions to develop companies that are leaders in their respective fields. The company acquired Etihad Airways earlier this year, increasing its assets under control to $157B. Its current holdings span across various sectors of the economy including food, agriculture, energy, healthcare, life sciences, logistics and others. Although ADQ is the smallest of Abu Dhabi's three major sovereign wealth funds, it has emerged as one of the region's most aggressive dealmakers.

This article originally appeared on isranomics.com and is reposted with permission.

Isranomics.com is a website that takes a unique look at Israel's economy, business, and innovations. It gives an overview of what's going on in the country's financial markets and provides its readers with useful information about Israeli companies that work in Israel and around the world. It is a good source of information for anyone who wants to get to know Israel from a non-political point of view.

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