The Affinity Partners venture capital fund, led by President-elect Donald Trump's son-in-law Jared Kushner, is poised to increase its stake in Phoenix Insurance to 9.9%, making it the largest shareholder in the company. The Israeli Capital Market Authority (CMA) is expected to approve the fund's request to hold up to 10% of Phoenix shares. This decision follows six months of negotiations between Affinity and the CMA.
Affinity initially acquired a 4.95% stake in Phoenix in July 2024 for approximately $123 million, alongside an option to purchase an additional 4.95% at the same price, contingent on regulatory approval. Since that initial purchase, Phoenix's stock price has surged by 55%, increasing the value of the second 4.95% stake to $193 million. With the CMA's approval, Affinity will purchase the additional shares, realizing a profit of $70 million on the new transaction, and a total profit of $140 million on its combined holdings in Phoenix – just six months after its initial investment.
Affinity Partners raised $2 billion, primarily from Gulf states, including Saudi Arabia, the UAE and Qatar. This led to speculation about whether the fund would receive regulatory approval in Israel. However, the CMA has now granted the necessary permit, allowing Affinity to proceed with its additional purchase of Phoenix shares.
Impact on Phoenix and ownership structure
With this acquisition, Affinity will surpass Harel Insurance (7.3%) and Clal Insurance (6.9%) to become Phoenix's largest shareholder. Despite this, Phoenix will remain a company without a controlling core. CEO Eyal Ben Simon and Chairman Benny Gabay will continue to lead the firm, as they have since Centerbridge and Gallatin funds sold their controlling shares.
Affinity has clarified to the CMA that this is a financial investment rather than a strategic one, and it does not intend to influence Phoenix's management. However, there remains a possibility that Affinity will gain the right to appoint one director to the company’s board.
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Phoenix is Israel's largest insurance company, managing assets worth $131 billion. The company reported a net profit of $336 million during the first nine months of 2024. It holds significant assets, including the Beit HaVered office complex in Givatayim; a 50% stake in the senior housing company "Ad 120"; and a 50% stake in "Golden Mortgage," a reverse mortgage service for the elderly. Phoenix is currently valued at $3.9 billion on the Tel Aviv Stock Exchange, significantly higher than its rival Harel, which is valued at $2.9 billion.
In July 2024, Centerbridge and Gallatin sold 16.48% of Phoenix shares at $10 per share to a group of investors. Among the buyers was Yitzhak Tshuva's Delek Group, which acquired a 4.9% stake for $58 million before selling it for a profit of $32 million. Other investors included Lazard Investment Bank, Briarwood Chase Capital Management, and Jewish billionaire Henry Swieca, founder of Highbridge Capital Management. Jefferies Investment Bank facilitated the transaction.
Affinity’s broader investment strategy
Affinity has previously pursued other investments in Israel. It attempted to acquire 25% of Phoenix's insurance agencies in the past, but negotiations, based on a valuation of $1 billion, were halted. The fund also owns a 15% stake in Shlomo Holdings, the family-owned business of the Shmeltzer family, which it purchased in 2023 for $110 million.
By increasing its stake in Phoenix, Affinity solidifies its position in Israel's financial sector while benefiting from the company's strong market performance and significant asset portfolio.