Delek deal to sell Pheonix to Chinese company fuels backlash

Monday's sale was not the first time that the sale of a major Israeli company to China drew fire.

August 23, 2016 03:06
2 minute read.
Beijing, China

Buildings are seen at sunset in Beijing. (photo credit: REUTERS)

The Delek Group on Monday announced that it would sell its stake in Israel's Phoenix insurance company to a subsidiary of China's Fujiyan Yango company for NIS 1.948 billion.

The sale of on of Israel's largest insurance groups to the Singapore-based Yango Investments must be approved by Dorit Salinger, the Finance Ministry's Supervisor of Capital Markets, Insurance and Savings.

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Already, the prospective deal has critics.

Yesh Atid MK Mickey Levy, a former deputy Finance Minister, asked Salinger to nix the deal, saying it was too risky to entrust control of so many Israelis' savings to a foreign entity.

"The Delek company and those who lead it are acting irresponsibly and leaving NIS 160 billion of Israeli's citizens pension funds in Chinese hands," he said.

"The sale concentrates significant control over the public's money with a very low investment in private capital, and there is a serious risk to the future of the savers' funds," he added.

While China is an important trade partner, he said, its business norms were not aligned with those practiced in the West. The company, he added, might operate with political instead of business interests when it comes to Israeli funds.

Meretz leader MK Zehava Galon demanded an emergency meeting of the Knesset Finance Committee to discuss the possible sale.

"This situation, where a foreign company holds concentrated control of a huge amount of Israel's public's money is a disaster, and all the more so when the controlling shareholder will be a Chinese company," she said.

"China is sees as one of the most corrupt and non-transparent companies in the word, which casts a heavy shadow on the suitability of any Chinese corporation to manage huge amounts of the Israeli public's pension," she continued.

If the sale goes through, she argued, Yango would control a sum equivalent to 45% of Israel's annual state budget.

Monday's sale was not the first time that the sale of a major Israeli company to China drew fire.

In 2014, the sale of dairy producer Tnuva to China's Bright Foods from British firm Apex Partners raised concern that China would be able to control 70% of Israel's dairy market.

A more recent sale, of the Dead Sea beauty product manufacturer Ahava to Chinese conglomerate Fosun, was met with less resistance. In 2013, Fosun dropped its own plans to buy a controlling stake in Phoenix.

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