TEL AVIV Feb 18 A new law to reduce the
concentration of economic power among conglomerates will have a
positive impact on Israel's capital market in the coming years,
the securities regulator said on Tuesday.
"I think the market will become more interesting ... more
competitive," Israel Securities Authority Chairman Shmuel Hauser
told a business conference.
Israel's parliament in December passed the Business
Concentration Law, which will limit the pyramid conglomerates to
two layers of listed companies and bar them from holding
significant financial and non-financial businesses.
Hauser said the number of groups structured as pyramids with
at least three layers has fallen to 48 from 68 in the past two
years as parliament debated the new legislation.
Hauser noted, however, that 10 conglomerates still account
for 40 percent of the market value of Tel Aviv-listed firms.
He said the success of the law will be not just in breaking
up the pyramids but the extent to which these assets are sold to
The test will be "to what extent these holdings, especially
in the financial sector, will pass to the public by the
dispersion of shares in the market," he said.
Hauser expects an increase in the base of investors, in
company market values and in market liquidity.
The law could put about 40 firms worth 80-100 billion
shekels ($23-$28.5 billion) up for sale, according to Israeli
corporate law firm Gross Kleinhendler Hodak Halevy Greenberg &
David Hodak, chairman of GKH, said he does not see Israelis
standing in line to buy the assets to be sold, nor does he see a
stream of foreign buyers.
"I think they will have to disperse the controlling shares,
as is happening with Discount," Hodak said, referring
to the sale of a controlling stake in Israel's third-largest
Discount's controlling shareholders in December sold a 7
percent stake to institutional investors, the start of a phased
sell-off of their 25 percent holding.
($1 = 3.5108 Israeli shekels)
(Reporting by Tova Cohen; Editing by Steven Scheer)