September 5, 2017 / 9:56 AM / a year ago

Israel's IDB agrees to sell Clal Insurance stake to Huabang Financial

JERUSALEM, Sept 5 (Reuters) - Israeli holding company IDB Development Corp signed a memorandum of understanding to sell its 44.9 percent stake in unit Clal Insurance to Hong Kong-based Huabang Financial Holdings, the companies said on Tuesday.

The non-binding deal values Clal, one of Israel’s largest insurers, at 4.88 billion shekels ($1.4 billion). IDB’s stake of 24.89 million shekels — is worth 1.35 billion shekels, while another 45.6 percent of Clal, which has assets of above 100 billion shekels, is traded on the Tel Aviv Stock Exchange.

Bank Hapoalim, Israel’s largest lender, owns 9.5 percent of Clal Insurance.

DB is required to sell its stake in Clal to abide by Israeli regulatory requirements that prohibit holding companies from owning both financial and non-financial businesses.

Huabang’s move follows two failed attempts by IDB to sell its stake in Clal to Chinese investors.

In July, IDB said that an overseas group had made an offer for its Clal Insurance stake but it did not identify the potential buyer. Clal has a market value of 3 billion shekels.

Huabang said the proposed acquisition, which is subject to regulatory approvals, will enable it “to diversify its business scope and further broaden its source of income.”

IDB’s controlling shareholder, Argentinian businessman Eduardo Elsztain, said in September he had hired JPMorgan to find a buyer for Clal Insurance.

The Israeli government has been reluctant to approve the purchase of major financial assets such as insurers by Chinese investors, fretting over pension cash.

Another Israeli conglomerate, Delek Group, has also run into difficulties selling its controlling stake in insurer Phoenix Holdings.

$1 = 3.5756 shekels Reporting by Steven Scheer, editing by Louise Heavens

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