Shlomo Group to Sell 15% Stake inAutomotive and Credit Businesses to Kushner's Affinity Partners

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by Ifi Reporter Category:Government Sep 6, 2023

 Shlomo Group, a diversified Israeli conglomerate, has announced the signing of a groundbreaking agreement to sell approximately 15% of the share capital of its automotive and credit businesses. The buyer is none other than Affinity Partners, the American investment fund associated with Jared Kushner, the son-in-law of former U.S. President Donald Trump. This transaction is valued at approximately NIS 570 million, effectively valuing the Shlomo Group's vehicle and credit activities at around NIS 3.8 billion.

 

What makes this deal particularly noteworthy is that it marks the first investment of Kushner's fund in an Israeli company. Affinity Partners, which raised a staggering three billion dollars last year, secured two billion dollars of its funding from Saudi Arabia's sovereign wealth fund. This association traces back to Kushner's tenure as a senior advisor to President Trump when he maintained a close relationship with Saudi Crown Prince Mohammed bin Salman, who also heads the country's wealth fund.

 

Under the terms of the agreement, a new subsidiary will be established under Shlomo Holdings, consolidating joint activities in the fields of automobiles, including leasing, renting, and selling cars, as well as credit services. Shlomo Holdings will retain approximately 85% of the issued capital of the new company, while the Affinity Partners fund will hold approximately 15%.

 

To ensure a fair valuation and safeguard Affinity Partners' interests, the entities have agreed on a value adjustment mechanism based on future results. This mechanism will ensure that the fund's holding rate in the new company will not exceed approximately 18%. Moreover, Affinity Partners will have the privilege of appointing a director and an observer to the new company's board of directors.

 

In addition to these key provisions, the Shlomo Group and Affinity Partners have entered into a shareholder agreement specifying that the new company will adopt a dividend distribution policy. Starting from the fifth year following the completion of the transaction and lasting for three years, the fund will have the option to compel the Shlomo Group to purchase all of its holdings in the joint venture at market price, as per the agreed-upon mechanism. If the Shlomo Group chooses not to exercise this option, Affinity Partners will have the right to demand an initial public offering (IPO) of the partner company on the stock exchange.

 

Furthermore, it has been established that to the extent that the fund promotes transactions of the joint company in countries in the Middle East and North Africa, it will be entitled to a distribution of profits under conditions agreed upon between the parties.

 

The Shlomo Group, founded 55 years ago by Shlomo Schmelzer, initially started as a car rental company, specializing in leasing and vehicle-related services. Today, it has diversified into various industrial sectors, encompassing Shlomo Holdings, Shlomo Insurance, Shlomo Motors, Shlomo Garages and Road Services, Israel Shipyards, Tadiran Telecom, and more. In 2022, the group reported a turnover of NIS 4.9 billion.

 

This strategic agreement between the Shlomo Group and Affinity Partners not only marks a significant milestone in the Israeli business landscape but also highlights the growing ties between international investment players and Israel's dynamic economy.

 

 

 

 

 Shlomo Group, a diversified Israeli conglomerate, has announced the signing of a groundbreaking agreement to sell approximately 15% of the share capital of its automotive and credit businesses. The buyer is none other than Affinity Partners, the American investment fund associated with Jared Kushner, the son-in-law of former U.S. President Donald Trump. This transaction is valued at approximately NIS 570 million, effectively valuing the Shlomo Group's vehicle and credit activities at around NIS 3.8 billion.

What makes this deal particularly noteworthy is that it marks the first investment of Kushner's fund in an Israeli company. Affinity Partners, which raised a staggering three billion dollars last year, secured two billion dollars of its funding from Saudi Arabia's sovereign wealth fund. This association traces back to Kushner's tenure as a senior advisor to President Trump when he maintained a close relationship with Saudi Crown Prince Mohammed bin Salman, who also heads the country's wealth fund.

Under the terms of the agreement, a new subsidiary will be established under Shlomo Holdings, consolidating joint activities in the fields of automobiles, including leasing, renting, and selling cars, as well as credit services. Shlomo Holdings will retain approximately 85% of the issued capital of the new company, while the Affinity Partners fund will hold approximately 15%.

To ensure a fair valuation and safeguard Affinity Partners' interests, the entities have agreed on a value adjustment mechanism based on future results. This mechanism will ensure that the fund's holding rate in the new company will not exceed approximately 18%. Moreover, Affinity Partners will have the privilege of appointing a director and an observer to the new company's board of directors.

In addition to these key provisions, the Shlomo Group and Affinity Partners have entered into a shareholder agreement specifying that the new company will adopt a dividend distribution policy. Starting from the fifth year following the completion of the transaction and lasting for three years, the fund will have the option to compel the Shlomo Group to purchase all of its holdings in the joint venture at market price, as per the agreed-upon mechanism. If the Shlomo Group chooses not to exercise this option, Affinity Partners will have the right to demand an initial public offering (IPO) of the partner company on the stock exchange.

Furthermore, it has been established that to the extent that the fund promotes transactions of the joint company in countries in the Middle East and North Africa, it will be entitled to a distribution of profits under conditions agreed upon between the parties.

The Shlomo Group, founded 55 years ago by Shlomo Schmelzer, initially started as a car rental company, specializing in leasing and vehicle-related services. Today, it has diversified into various industrial sectors, encompassing Shlomo Holdings, Shlomo Insurance, Shlomo Motors, Shlomo Garages and Road Services, Israel Shipyards, Tadiran Telecom, and more. In 2022, the group reported a turnover of NIS 4.9 billion.

This strategic agreement between the Shlomo Group and Affinity Partners not only marks a significant milestone in the Israeli business landscape but also highlights the growing ties between international investment players and Israel's dynamic economy.

 

 

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