Solomon Capital Markets has sealed the purchase of Bank Hapoalim's mutual funds management arm Poalim Mutual Funds Ltd. (PKN) for NIS 954 million.
The price represents NIS 46m. for each NIS 1 billion in assets managed by PKN, which is about NIS 12m. more (per billion of managed assets) than Harel Insurance paid for Bank Leumi's asset management arm Leumi Pia last month. PKN with a market share of 15.7 percent is the largest manager of mutual funds in Israel's economy with 74 separate funds. The mutual fund manager has seen a steep growth curve over the past two years from NIS 11.7b. in managed funds in 2003 to NIS 15.6b. in 2004 and some NIS 20.5b. funds under management as of September 30, 2005.
In the statement to the Tel Aviv Stock Exchange, Solomon Capital Markets, owned by Amit Berger, Ilan Ben-Dov, and Ron Alroy, for the first time disclosed the mutual fund's operational profitability over the past two years. In the first nine months of this year PKN generated an operating profit of NIS 138m or about 81% of revenues which amounted to NIS 169m. In the fullyear of 2004, PKN made an operating profit of NIS 145m compared with NIS 71m in 2003. However, the operating profit figures do not include management fees charged by Poalim Financial Holding, Bank Hapoalim's fully owned holding company and other expenses.
Bank Hapoalim will post an NIS 800m. pre-tax capital gain in the first quarter of 2006.