Bank HaPoalim working it through expansion
Written by: Zack Miller | December 3, 2007
By Zack Miller
IsraelNewsletter.com
Bloomberg ran an article over the weekend saying that Bank HaPoalim was in due-diligence discussions over an undisclosed Russian bank.
Somehow, although we don’t yet know the name of the bank, we do know the size of the transaction. Bloomberg pegs Ma’ariv’s estimate of the transaction size at $150 million for a 74 percent stake in the firm, representing 3.5x on assets.
“Some of the payment will be used to increase the bank’s capital and to open more retail branches, Ma’ariv said. Hapoalim believes the Russian bank will be able to earn a 12 percent to 13 percent return on equity, it said.”
This follows in-line with our thesis that Israeli banks, utilities, and cellular firms need to look towards international expansion to continue growth. I wrote a while back that Israeli firms can continue to squeeze more out of their customers (banks by offering more services and cellular firms by introducing data to boost ARPU) but Israel is a mature market. Mature markets are defined by penetration of services.
My partner and esteemed perma-bull, Aaron Katsman, has written about the spillover effects from the subprime/real estate issues in the US and how they might affect Israeli banks.
Bank Hapoalim wants to use this investment to increase its retail presence. Russia looks prime for expansion.
Disclosure: Author’s fund has no position in any stock mentioned as of 11/09/2007.
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Zack Miller is the lead equity analyst for America Israel Investment Associates, LLC. and a former equity analyst for a leading multinational hedge fund. For more information, go to www.israelnewsletter.com or call 1-888-327-6179, or email zack@israelnewsletter.com
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