Steve Mnuchin in talks to buy a 25% stake in Phoenix Agencies for over $235 million
Steve Mnuchin in talks to buy a 25% stake in Phoenix Agencies for over $235 million
Liberty Capital, headed by the former US Treasury Secretary, is in talks to acquire 25% of the Phoenix insurance agencies at a company valuation of $950 million
Will the former U.S. Treasury Secretary become Phoenix's new partner in its insurance agencies? Calcalist has learned that Liberty Capital - headed by Steve Mnuchin, who was the Treasury Secretary in President Donald Trump's administration - is the leading candidate for the purchase of 25% of Phoenix Agencies, the subsidiary of Phoenix Holdings, which owns eight insurance agencies.
The talks between the parties have been going on for several weeks. Last week, Mnuchin visited Israel and met with Eyal Ben Simon, CEO of the Phoenix Group, together with David Friedman, who was the U.S. ambassador to Israel and who is also a partner in Liberty Capital. The contacts between the parties began even earlier through representatives of the fund.
Phoenix Holdings, the parent company of Phoenix Agencies (80%), began negotiating for the sale of 25% of the company in August last year. The sale procedure is managed by The Jefferies Group. The talks were revealed for the first time in Calcalist. Along with the Phoenix, the company is owned by the chairman Itzik Oz (16.5%), who became a partner in it when he sold his agency Agam Leaderim to the Phoenix, and Moshe Sasson (3.5%). At the time, the price tag of the Phoenix Agencies was one billion dollars. In the time that has passed since then, the price tag has been reduced a little, and now the talks with Liberty Capital are conducted according to a value of $950 million.
Although the contacts between the parties are serious and significant, there is no certainty that they will mature into a deal. If the deal does go through, Liberty Capital will purchase the shares of the Phoenix Agencies from Phoenix Holdings, Oz and Sasson. That is, 25% of the holdings of each of the shareholders of Phoenix Agencies.
During his visit to Israel, Mnuchin told Calcalist that he is not afraid to invest in Israel, even now: “The initial reaction at the beginning of the war was: stop, and you saw the stock market drop significantly as well as the shekel. However, we've seen both return to normal levels in the past month. We have a long-term view, positive views on the economy here and we're looking at some very large significant investment opportunities. Despite what's going on with the war, we believe in the Israeli economy and the opportunities going forward.”
Until last week, there were also talks with the American investment fund Searchlight, which controls the Israeli telecommunications giant Bezeq, but these talks were halted, at least temporarily. The contacts between the parties were interrupted not due to a debate over the price tag attached to Phoenix Agencies, but due to a dispute regarding the nature of the partnership in the insurance agencies company and the future separation mechanisms.
Another American fund that has been in talks to buy a stake in Phoenix Agencies is the Affinity Partners investment fund, which is led by Jared Kushner, son-in-law of former U.S. President Donald Trump, and who served as his advisor when he was president. However, the contacts between the parties were frozen about a month after the war between Israel and Hamas broke out. Affinity Partners was the leading contender when Phoenix Holdings embarked on a move to bring in a partner. At the same time, several foreign private equity funds expressed interest in the deal: the European Vitruvian Partners, the British Pollen Street Capital, the American Reverence Capital Partners and the American Blackstone, the largest alternative asset manager in the world.
Mnuchin (61) had a lengthy career on Wall Street, holding senior positions in various investment banks, most recently at Goldman Sachs, before joining politics under Trump. Following the conclusion of the political chapter, which could resume after the November elections, the seasoned financier used his new political experience to establish an investment fund named Liberty Capital.
The objective was to connect the wealth of the Gulf and the U.S. to Israeli high-tech and beyond. However, when Mnuchin raised $3 billion for the new investment fund in 2021, the Middle East landscape seemed very different from its current state. The Abraham Accords, normalizing relations between the United Arab Emirates and Israel, had only recently been signed, and a similar agreement with Saudi Arabia seemed imminent. The fund, co-founded by Ambassador Friedman, aimed to foster closer ties through Saudi and Emirati investments in Israeli high-tech. According to reports, Mnuchin and Friedman, among others, attracted investments from the sovereign fund of Saudi Arabia (PIF), as well as Mubadala, the wealth fund of Abu Dhabi.
Since its inception, the fund has invested $850 million in two Israeli cyber companies, Cybereason and BlueVoyant, and acquired Zimperium, founded by Israelis. However, since mid-2022, the fund has not announced any new investments in Israeli high-tech.
The revenues of Phoenix Agencies in January-September 2023 were NIS 621.8 million, with a total profit of NIS 240.7 million. These reflect an annual rate of NIS 829 million in revenue and a total profit of NIS 321 million. This is an increase compared to the results of 2022, when the revenues of the Phoenix Agencies were NIS 769.9 million and the total profit was NIS 300.1 million.
