Hong Kong-based Huabang Financial Holdings has agreed to purchase Israeli holding company IDB Development Corp.’s 44.9% stake in Clal Insurance, the companies announced in a statement.
The firms have signed a non-binding memorandum of agreement, which values Clal, one of the largest insurers in Israel, at ILS4.88 billion (US$1.4 billion). Bank Hapoalim, the market’s largest lender, has a 9.5% stake in Clal.
IDB is required to divest from its stake in Clal to comply with Israeli financial regulations that forbid holding companies from having stakes in both financial and non-financial companies, reports
Reuters.
There were two previous attempts by IDB to sell its stake in Clal to Chinese firms before the deal with Huabang was opened.
In the statement, Huabang said that the proposed deal, which still needs regulatory approval, will allow it to “diversify its business scope and further broaden its source of income.”
Argentinian businessman Eduardo Elsztain, who holds a controlling stake in IDB, said that he had tapped JPMorgan to search for a buyer for Clal Insurance. Delek Group, another Israeli conglomerate, had previously had difficulty selling its stake in insurer Phoenix Holdings, showing the reluctance of the Israeli government to greenlight the sale of major financial firms to Chinese investors.
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