Elsztain says regulators remain just a temporary roadblock for IDB—which he calls a “gift from heaven.”
Meanwhile, he’ll have to sell IDB’s $470 million stake in Clal Insurance Enterprises Holdings Ltd. to comply with a law to reduce business concentration. Israeli regulators thwarted his previous attempts to sell to Chinese investors, then ordered IDB to unload blocks of the shares on the local stock exchange every four months. Elsztain said would lead to a 40 percent loss in the value of his investment. He wants two more years to find a buyer.
Elsztain’s complaints “remind me of when J.P. Morgan argued against selling his stakes in his monster conglomerates—I don’t think anyone would say that the U.S. was over-regulated,” said Dror Strum, Israel’s former antitrust commissioner. “Many people are really complaining about regulation that would prohibit them from doing things they’d be prohibited in other countries as well.”
Israel’s finance ministry, which oversees the sale of Clal, didn’t respond to a request for comment.
Elsztain, who had been investing in Argentine real estate, was taking a year off in New York in 1990 when a contact arranged a meeting with Soros. Over the course of an hour, Elsztain described the investment opportunities in Argentina. When Soros asked him how much money he was willing to manage, Elsztain said $10 million. “OK,” Soros replied.
“That’s how we worked,” Elsztain said. “He gave me the freedom to invest all over the world.” A Soros spokesman confirmed the story.
From his real estate empire in Argentina to the iconic Lipstick building in New York, a mining company in Australia and now IDB in Israel, Elsztain’s interests span the globe through his holding company, Inversiones Financieras Del Sur SA (IFISA). His net worth is approaching $600 million, according to Bloomberg calculations. A spokesman declined to comment.
Cultivating ties with top politicians has been one of his hallmarks. In 2012, former Argentine President Cristina Fernandez de Kirchner secured the biggest state-backed mortgage program for Banco Hipotecario SA, which is majority owned by the government and which Elsztain manages. A week after sitting with Bloomberg in New York, Elsztain gathered some of Argentina’s wealthiest people at Llao Llao, his five-star resort in Patagonia, to receive a two-day briefing from the interior minister and others about President Mauricio Macri’s planned tax reforms, according to four people present at the meetings.
Elsztain became interested in orthodox Judaism after his first visit to Israel at the age of 20; his time in New York deepened his faith. He built a backyard connection between his house and an adjacent synagogue in Buenos Aires for ease of entry. Business was part of the package: He invested in some Israeli companies in the 1990s. By 2012, he wanted more.
The opportunity was textbook Elsztain: IDB was drowning in debt when he took it over in the wake of the financial crisis. But it still controlled major assets, such as the country’s biggest supermarket chain and mobile operator.