Abu Dhabi state fund’s bid to acquire Israel’s largest insurance company Phoenix fall through

Israel’s largest insurance company will not be changing hands after all. The Phoenix Insurance Company announced on Sunday that the sale of 25% of the company to the Abu Dhabi Developmental Holding Company (ADQ) has fallen through due to regulatory concerns. ADQ is the smallest of Abu Dhabi’s three main sovereign wealth funds and has over $150 billion under management.

The Phoenix announced last December that it had agreed a deal to sell 25% for NIS 2.3 billion (approximately $640 million) from U.S. funds Centerbridge and Gallatin Point Capital.

Phoenix was valued at the deal at NIS 9.2 billion (approximately $2.54 billion), which is a little below its market value of NIS 9.77 billion as of last Thursday’s closing.

However, Phoenix notified the Tel Aviv Stock Exchange on Sunday that “the parties have come to a mutual understanding regarding termination of the Term Sheet inter alia in light of the potential regulatory limitations that would have arisen from the acquisition of the control stake by the Consortium resulting in potential restrictions for several members of the Consortium to undertake additional material investments in Israel.”

In parallel with the termination of the Term Sheet, the company also said that the parties are finalizing an agreement through which the controlling shareholder will sell the consortium shares in the company while still retaining at least a 30% controlling stake.

The deal required regulatory approval from several bodies, including Israel’s Capital Market Authority, Insurance and Savings, and the Israel Competition Authority.

As part of the deal, Phoenix executives, led by CEO Eyal Ben Simon and chairman Benny Gabbay, were set to purchase a 2% stake in the company, while committing to remain at the company for the next five years. Gallatin Point Capital was meant to retain a 6% stake in Phoenix.

ADQ has emerged as one of the region’s most active dealmakers over recent years. ADQ began in 2018 as a holding company for government assets and has been consolidating its portfolio, privatizing some assets and making strategic acquisitions to build companies that are leaders in their industries locally or regionally.

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