First came trouble with his partner, Mordechai Ben-Moshe. Elsztain bought him out for 152 million shekels ($43 million) in 2015 after they squabbled over strategy.
Elsztain, through a spokesman, attributes the “deteriorated” situation of some of IDB’s operating units as well as pressure from bondholders as the reason for the split with Ben-Moshe. Through his spokesman, Ben-Moshe declined to comment.
Then came trouble with the government over the Clal stake. IDB agreed to a timetable for the forced sale, but Elsztain has since irked regulators by telling them he doesn’t want to divest the holding, according to three people close to the matter. IDB threatened to sue its government-appointed trustee last year to delay the stock-divestiture process.
Through his spokesman, Elsztain denied there is any bad blood with the ministry. JPMorgan Chase & Co. is advising IDB on the sale.
“Babysitting a company in crisis” is how Elsztain describes his time at IDB until now. Things are looking up, he says.
Clal shares have jumped about 20 percent this year on the expectation that rising interest rates will improve the returns of the insurer’s investments. Shufersal Ltd., the supermarket chain, boosted 2016 profit to the highest levels in five years.
IDB bought some time by selling five percent of Clal last month to an investor, who has agreed to sell back the shares to Elsztain when a buyer is found for the entire stake. The company said it has filed an appeal to Israel’s high court challenging a recent ruling in favor of the forced sale’s timeline. The next bloc offering is slated for early September.
“Is the company out of the woods yet? No,” said Yaniv Pagot, head of strategy at Ayalon Group, an institutional investor in Ramat Gan, Israel. It holds IDB bonds. “Elsztain has put in real money, and a lot of it. He’s not a magician, but without him there wouldn’t be an IDB.”
—With assistance from Gabrielle Coppola and Hannah Dormido.
This article was provided by Bloomberg News.