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Israel’s financial, regulatory and political systems have been in uproar this week, with news on Tuesday huge deal The Phoenix Group, the country’s largest insurer, and Abu Dhabi’s government-backed ADQ Developmental Holding Company are in talks.
According to reports, the two parties signed a memorandum of understanding, in which 25% Phoenix It will be transferred out of Centerbridge Partners and Gallatin Point Capital, two U.S. capital funds that control the insurer and Abu Dhabi. This means that the UAE fund will become Phoenix’s largest shareholder and effectively control the insurance company. The deal is valued at approximately $680 million.
The signing came as a surprise to the Capital Markets, Insurance and Savings Authority, the country’s regulator for such deals. It will determine whether the purchase will be approved. Approval from the Israel Competition Authority is also required.
In the past, Israel rejects request Acquire control of Phoenix from a Chinese company. The current decision can only be finalized after a thorough investigation into the economic and security implications of the deal.
News of the deal was initially accompanied by reports of economic peace benefits from the Abraham Accords. It didn’t take long, however, for experts to question and even warn about what the deal might mean.
according to Guy RonickOne of Israel’s leading economic commentators said that if the Capital Markets, Insurance and Savings Authority allowed the Abu Dhabi-based investment fund to buy Phoenix, it would transfer control of the pensions and savings of hundreds of thousands of Israelis to foreign governments. He described the deal as “dangerous and unprecedented” and suggested that every effort should be made to prevent its development.
Rolnick isn’t the only one who has questioned the deal. Nearly every article and report raises the question of whether it is right for a group with such direct ties to a foreign government — whose interests go beyond economics — to take control of such a strategic asset. The structure of the Israeli market allows institutions like Phoenix to have enormous influence over the market.
The financial media reported extreme case That is the concern of top financial market officials. First there is corruption: what if the new owner used the insurance company’s assets for corrupt investments with individuals and companies in the Gulf and elsewhere in the world?
The second concern is the leakage of sensitive information to foreigners. The insurance company has vast amounts of data on all Israeli citizens who use its services. This includes wages, medical documents, family status and assets.All of these are accessible foreign government.
Notably, neither the Capital Markets Authority nor Treasury officials cited in the report on the deal spoke on condition of anonymity. Clearly, they recognize the political and regional sensitivities involved in smearing business deals with Arab states, which only recently signed normalization agreements with Israel. Then there was some unease among senior officials about striking such a large and sensitive deal before a new government took office.
A senior Likud official told Al-Monitor he was happy with the deal because it showed abraham agreement The normalization of relations between Israel and the United Arab Emirates (UAE) in 2020 is fostering closer relations between the countries. Still, senior Likud officials sounded the alarm about geopolitical turmoil in the Middle East. For example, if the UAE suddenly decided to seek friendlier relations with Iran, for example, such a shift would have huge implications for Israel’s national security and economy, he noted.
prime minister designate benjamin netanyahu It has not yet expressed a position on the deal. He counts the Abraham Accords as his greatest diplomatic achievement. One of his main priorities is to promote relations with moderate Arab states, especially those included in the agreement.Although the final decision will be made by a committee of experts On behalf of the Capital Markets Authority and the finance ministry after the UAE consortium filed its final application, if Netanyahu came forward in favor of the deal, it could influence a decision in its favor.
On the other hand, the failure to approve the takeover of a UAE holding company headed by Tahnoun bin Mohamed Al Nahyan, brother of UAE leader Mohamed bin Zayed Al Nahyan, could roil the Relations between Israel and the UAE. Netanyahu certainly does not want that to happen, based on Israeli assessments, so he is expected to support the deal.
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