Serendipity.
In my last piece discussing some of the potential headwinds at Tel Aviv Stock Exchange, I briefly covered the interesting relationship TASE has with its pre-privatisation members:
Almost 19% of the company’s ownership is held by pre-privatisation shareholders who have the beneficial value of that ownership capped by law. These shareholders (who are mostly Israeli banks) are capped out at 508 ILS per share. Upon the sale of those shares, TASE takes the balance of the value of these securities - as of this writing north of 1500 ILS per share. Both sides have engaged in a game of cat and mouse over the sale of these shares, but negotiations have failed at every turn. Currently TASE is of the opinion that dividend payments actually get deducted from the capped value of those shares. This means that past and future dividend payments get counted against the capped value. It’s all very beguiling, but also frustrating. Upon the sale of these shares TASE will realise a significant cash value (about 240M ILS by my calculations - enough to retire more than 10% of the stock outstanding), and liquidity in the stock will open up.
Everyone seemingly wins, except for the Banks who continue to hold for pure spite perhaps(?). Management have alluded to a resolution through the courts, or the regulator, or via legislation but nothing is concrete at the moment.
Ironically, TASE came to an understanding with these financial institutions one day after I made this post - God loves to reward a fool.
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