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Competition over US real estate business causes shakeup at major Israeli underwriting firm

Three key people have left Poalim IBI, and they're taking a huge amount of American biz with them
By Chava Gourarie | August 22, 2017 10:35AM

Gal Amit, Rafael Lipa and the Tel Aviv Stock Exchange (Credit: Getty Images)

With U.S. real estate companies quickly becoming an established sector in the Israeli bond market, financial firms are vying for their business.

Over the weekend, the shares of underwriting firm Poalim IBI plunged after an announcement that the CEO would be leaving to start his own firm that will primarily serve U.S. companies.

Since 2010, IBI has served as the exclusive underwriter for Victory Consulting, one of the most active firms in taking American real estate companies public. Last week, Victory, led by Rafi Lipa and Gal Amit, announced that they’re departing IBI and taking the CEO, and the American business, with them.

The CEO, Erez Goldschmidt, who has been with IBI for 14 years, will start his own underwriting firm, which will be jointly owned by Lipa and Amit.

IBI’s shares dropped 40 percent in response to the news of both Victory’s and Goldschmidt’s departures, since revenue from the U.S. bond deals constituted 63 percent of IBI’s income in 2017 and 48 percent in 2016. Since January, IBI managed 12 bond issuances by American companies, including the debut of Jeff Sutton’s Wharton Properties.

Discount Bank is another firm that tried their hand in this market. Earlier this month, they made a failed attempt to bring UIRC, a D.C.-based firm that primarily leases to government agencies, to the Israeli market. UIRC decided to postpone when the results came in and the interest rate was too high.

Goldschmidt told The Real Deal that he saw value in doing the underwriting in-house.“I’m going to utilize my experience—10 years experience as CEO—to continue to lead in the underwriting market in Israel and to create a one-stop-shop for current and new customers,” he said.