Surprise in the industry – The Capital Market Authority refuses to approve the acquisition of Wobi by Oren Mizrach, this after the Competition Authority approved the transaction in May of this year. The significance – Oren Mizrach will not acquire the Wobi agency, currently held by the American insurance giant White Mountains.
White Mountains (White Mountains Insurance Group) is an American holding company (registered in Bermuda) specializing in investments in the insurance and financial fields. In recent years, the company has become a significant player in the insurance and fintech market in Israel: alongside its control of the price comparison website Wobi, it is also the primary controlling owner (in partnership with Alon Ketzef) of the DavidShield and PassportCard group.
The refusal of the Capital Market Authority, so industry figures fear, may signal to foreign investors a difficulty in doing business with Israeli companies, something that may reduce the volume of foreign investments in Israel.
According to sources familiar with the details, the main arguments of the Authority are that the size of Oren Mizrach, and the fact that it is held by The Phoenix, will cause harm to competition if the acquisition of Wobi is approved.
However, it should be noted that the holding of insurance agencies by institutional entities was examined in depth by the economic regulators, including the Capital Market Authority, and the sweeping conclusion was that there is no impediment to institutional bodies holding insurance agencies in their ownership. In that same regulators’ team that examined the issue, the Commissioner of the Authority Amit Gal was also a member. This team reached the conclusion that there is no wrongdoing in the holding of agencies by institutional entities.
This is not the first time that the Capital Market Authority finds itself at odds with other regulators. For example, in the regulatory arbitrage reform surrounding long-term savings products, the Authority opposed the recommendation to create an investment account in which mutual funds, provident investment funds, and savings policies would be concentrated.
On another subject – activism of institutional entities – a dispute was also created. Chairman of the Securities Authority, Adv. Seffi Zinger, called at the annual economic conference of the Association of Publicly Traded Companies to allow institutional entities more activism in managing public companies. The Commissioner of the Capital Market Authority Amit Gal, who is himself the regulator supervising those institutional entities, came out at the annual conference of the insurance and finance industry of EY with an opposite call: to draw a clear red line preventing institutionals from becoming de facto controlling owners.
On the other hand, others actually welcome the non-approval of the deal. A senior source said: “I was surprised that after the Competition Authority disqualified other transactions based on data, it approved this deal. In the motor property field, data is significant for competition, and it is important to maintain walls between data and distributors and manufacturers.”
From The Phoenix Group it was stated: “A year after submitting the application for approval of the transaction and half a year after its approval by the Competition Authority, we received with surprise yesterday (Wednesday) the position of the Capital Market Authority, which is considering not approving the transaction. All of the arguments of the Capital Market Authority were examined in depth for many months by the Competition Authority, which as stated approved the transaction.
“From a initial reading, the arguments in the letter even stand in contradiction to the recommendations of the inter-ministerial committee regarding the holding of an insurance agency by institutional entities, which published its recommendations last year. On the merits of the matter, The Phoenix Group is studying the Authority’s position and considering its steps.”
At the Capital Market Authority, they refused to convey the grounds for rejecting the application and stated to Polisa in response: “The Capital Market Authority exercises its powers independently and in accordance with the law. The identity of a specific investor is irrelevant since every application is examined on its merits, with the preservation of the market and the public interest standing before the Authority’s eyes.”
