While Bank Leumi holds a 80% stake in Leumi Card, Azrieli Group, an Israeli real estate company, owns the remaining 20% interest.
The sale will see Bank Leumi earn NIS2bn ($547.24m) while Azrieli Group’s share will be NIS500m ($136.81m).
Warburg Pincus managing director and Europe head Daniel Zilberman said: “The Israeli payments, consumer finance and SME lending markets present considerable opportunity, and we look forward to working closely with Chief Executive Officer Ron Fainaro and his talented management team.”
According to Bank Leumi, the sale of Leumi Card complies with the Law for Increasing Competition and Reducing Concentration that needs the bank to divest its stake in the subsidiary.
The Israeli bank said that following assessment of various alternatives, it picked the best and most attractive option available option for Leumi Card alongside the Azrieli Group.
Leumi president & CEO Rakefet Russak-Aminoach said: “Due to the importance of Leumi Card and its services to customers, we endeavored to find a reputable buyer with extensive experience in finance and payments, who will be committed to the development and success of Leumi Card in its new independent path.
“Warburg Pincus’s experience will assist Leumi Card in realizing its business strategy and ensure innovative, high-quality and professional service to its customers.”
As per the terms of the deal, Bank Leumi and Azrieli will be paid the consideration for Leumi Card, in three installments by Warburg Pincus. The first one will be paid on the completion date of the deal, the second a year after that and the third two years after that.
The transaction will be subject to receipt of regulatory approvals and meeting of preceding conditions.
Also, Warburg Pincus has given an option to Leumi Partners, a 100% subsidiary of Bank Leumi, to acquire up to 20% in Leumi Card under the same terms and conditions in which it will buy the credit card business. The exercise of the option will be based on securing the required regulatory approvals.
