Rani Zim: Israel's newest tycoon
From founding a fast growing shopping center chain to mutual fund management through the acquisition of Psagot, Rani Zim says he is only just starting out.
"We want to inject new blood into Psagot, and put our
DNA into it. We'll make the company hungry. Psagot was lacking that hunger, and
we're going to change that," said Rani Zim, hours after acquiring control
(75%) of Psagot Mutual Funds and Psagot Securities for NIS 309 million.
Zim doesn't lack appetite. He owns shares in three companies
traded on the Tel aviv Stock Exchange (TASE) with an aggregate value of NIS 1.3
billion; his share is valued at NIS 673 million, mainly thanks to the shopping
centers management company that bears his name. He also owns 100% of the
privately held Office Depot chain, and 50% of the duty-free electrical and
electronic goods franchise at Ben-Gurion Airport (in partnership with Electra
Consumer Products).
Despite all this, Zim still views himself as just starting
out. "We set targets for our companies that are several times higher than
their current volumes, as shown by the sorts of activities we acquire. We build
big, reliable businesses that will be very valuable, and I invest all my money
in these companies. I got into the stock market to grow," he recently told
"Globes."
The deal to acquire Psagot's mutual fund and portfolio
management operations, closed by Zim through non-bank credit company Value
Capital, which he controls, illustrates how much Zim believes in the businesses
he's acquired, and how far he will go to enhance them. "We're looking at
Psagot's activity as an investment house platform. Our mission is to restore
its faded glory. We didn't get in it for the short-term, and I don't want to
start re-selling activity of a company I've acquired to other entities. We'll
invest in the people, activity, organization, market and collaborations with
lots of other entities in the market. We want to bring a different flavor to
the market," he explains.
Zim aims for collaborations with other entities; even now,
the deal to purchase Psagot's assets was executed together with an investor
group that includes, among others, Yohan Kadoche, Kenlov Capital (managed by
Olivier Koenig), along with a large US-based investment house H.C. Wainwright.
Once the deal is closed, Value Capital will own 75% of the acquired assets, and
will have full control over Psagot's acquired operations, supported by
professionals who bring with them experience in investment and finance.
Staking a claim on the TASE
The collaboration that put Rani Zim on the Israeli stock
market map was done together with brother Adi. In 2010, the pair took discount
food retail chain Kimat Hinam public. Just two years after the IPO, the Zim
brothers made an impressive exit, selling Kimat Hinam to competitor Yenot
Bitan, in a deal that netted them about NIS 350 million. Since the IPO, the two
have accrued capital of some NIS 420 million from the deal through the sale of
shares, trades, and dividends.
Rani Zim currently has a diverse and extensive portfolio of
activities in real estate, finance, and retail. His main activity is in the
acquisition and operation of shopping centers, through Rani Zim Shopping
Centers, which it he took public in March 2018. Since then, the company's share
has jumped 160%. This has enabled Zim, who presently holds about 54%, to
realize some shares. In all, Zim has distributed NIS 70 million in shares to
institutional entities.
Expanding into energy
Rani Zim Shopping Centers open-air shopping centers, are
located mainly in Israel's outlying areas, including a significant number in
Arab localities. These operate under the SEVEN brand name, which Zim now fully
owns through his recent acquisition of SEVEN's partner, public company Midas.
Immediately after the NIS 70 million Midas share purchase,
Zim said "In line with the company's vision, we will continue with and
accelerate development of projects in the Arab communities, and deepen the
company's activities there, as well as in the Jewish outlying regions and
under-served neighborhoods, and we're looking into expanding into additional
activities, including medical and high-tech parks."
"We chose to implement this transaction through a
direct, clean acquisition of property rights without also acquiring liabilities
or other assets that were owned by Midas, and that do not relate to the core
activity in the Arab sector. The deal structure will allow us to enhance and
optimize the value of the acquired assets, along with the continued improvement
of the rest of the company's assets."
As for medical parks, Zim Shopping Centers already began
pursuing the matter last year when it announced an initial contract with
landowners from the Arab sector to lease 17.5 acres near Arraba and Sakhnin in
the Galilee. The project would establish a campus with 120,000 square meters of
buildings, including a medical center, and providing employment and services.
Zim is not resting on his laurels. He said, when recently
discussing upcoming plans with "Globes". "In the coming year, we
have a mall under construction in Ganei Tikva that's going to open by the end
of the year, a shopping center in Tira opening in a month or two, an extension
[of an urban food center] in Beit She'an that will open in two months, and our
Zim Urban Life Kfar Saba will start generating income in four months."
Zim prefers diversifying his businesses, to counterbalance
the dominance of the shopping center company. For example, his investment in a
17% stake in Brenmiller Energy Storage, in which he became a partner this year,
with an investment of nearly NIS 20 million.
The future: financial sector activity
The acquisition of Psagot's assets will enable Value
Capital, in which Zim became the controlling shareholder in July 2020, to
develop a fourth financial activity. It will enter into fintech and credit
underwriting activities through financial technology product developer
AppliCheck, into digital wallet activity through Prepay, which issues and
markets international rechargeable debit cards, and into logistics funding
through cooperation with customs brokers.
Although Zim is active in the financial world, he is the
first to admit that Psagot Mutual Fund's NIS 40 billion in assets, and NIS 50
billion in portfolio management assets, significantly upgrade his presence in
the financial world. "It's definitely a step up, although I'm used to
making deals in the millions so, relatively, it's not a big deal in terms of
scope, and doesn't scare me. I understand investing and make lots of
investments in both my private and public companies. I know they're hungry for
success, the energy to succeed, and lots of intelligence and experience. If the
people are willing, the sky's the limit and there's no doubt we'll bring
results."
As to the question of the remaining 25% of Psagot Portfolio
Management and Psagot Mutual Funds, which remains with Altshuler Shaham, (who
must sell them within a year), Zim says that, in the meantime, he has no
intention of acquiring the full holding. "We've purchased 75% of the
activity now, and feel very comfortable with that," he explains.
The plan: Keeping the "Psagot" brand
Zim also feels comfortable with Psagot's employees who will
be keeping their jobs; he has even promised to maintain the Psagot brand name.
"At the moment, we're keeping the current management. We'll come in,
understand Psagot's activities, have one-on-one state-of-play meetings with
everyone, and then make decisions about management going forward. My belief is
that Psagot has very good human capital which can be maximized, and one of my
tasks is to improve every employee's performance."
Zim believes in his new acquisition's activity. In light of
the results, it seems the market also believes in him. A good recent example is
the debit side, Rani Zim Shopping Centers having raised about NIS 250 million
at a mere 1% long-term interest rate.
Psagot, originally founded by Bank Leumi (TASE: LUMI), was
once Israel's largest investment house. In recent years, however, it had lost
its prestigious standing and - more significantly - its assets. For a long
time, Apax Partners, which controlled the investment house, had tried to sell
it. Last February, Apax signed an agreement to sell Psagot to Altshuler, which
then became the country's largest investment house.
It was Altshuler Shaham Provident Funds & Pensions that
acquired Psagot for NIS 910 million. However, because regulations prohibit
provident and pension companies from holding non-pension provident activities,
such as mutual funds or portfolio management, it was forced to sell Psagot
Mutual Funds and Psagot Securities together with the brokerage activity. The
transaction closed last week, with the sale of these activities to Rani Zim
(75%).
Additionally, two other agencies owned by Psagot were sold -
Clal Insurance acquired Davidoff Insurance Brokers for NIS 68 million, and
shortly thereafter Asaf Banai and Shlomi Alberg, the founders of Profit
Financial Services, repurchased the agency they had previously sold to Psagot
for NIS 160 million.
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