February 27, 2019 / 11:44 AM / 22 days ago

UPDATE 1-Delek in deal to sell insurer Phoenix to private equity firms

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TEL AVIV, Feb 27 (Reuters) - Delek Group said on Wednesday it signed a non-binding deal to sell its 30 percent stake in insurer Phoenix Holdings for 1.6 billion shekels ($442 million) to private equity firms Centerbridge Partners and Gallatin Point Capital.

The final deal could include an increase of up to 800 million shekels or a decrease of 200 million based on returns for the buyers over five years, and Delek said it will arrange a five-year loan for the buyers to fund half the acquisition.

Delek, one of Israel’s largest business groups, has switched its focus to energy and is a partner in large offshore natural gas projects. It is being forced to divest from Phoenix due to new regulation that prohibits conglomerates from holding stakes in both financial and non-financial businesses.

The sides have 60 days to reach a final agreement, Delek said. They will then need regulatory approval.

Several deals Delek reached with potential buyers over the past six years for its controlling stake in Phoenix have fallen through due to concern by Israeli regulators over some foreign groups, namely from China, taking over the company. Phoenix is a leading manager of Israeli pension funds.

Instead, Delek has been slowly selling down its shares to various institutions. ($1 = 3.6171 shekels) (Reporting by Tova Cohen and Ari Rabinovitch; Editing by Alexandra Hudson)

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