Customers wait beside automated teller machines (ATM) outside a Bank Hapoalim Ltd. bank branch in Jerusalem, Israel. (Photographer: Ariel Jerozolimski/Bloomberg)

Israel’s Largest Credit-Card Business Is Headed for a $1 Billion IPO

(Bloomberg) -- Bank Hapoalim Ltd. is leaning towards an initial public offering for Israel’s largest credit-card business, rather than a sale or distributing its stake to shareholders, that could value the unit at about $1 billion, according to people familiar with the matter.

Israel’s second-biggest bank has been working with Citigroup Inc. on options for Isracard Ltd. and could list the unit’s shares on the local exchange shortly after reporting annual earnings in March, the people said, asking not to be identified because the plans are private. Hapoalim has almost finished working on a draft prospectus for the offering, but is cautious about when and if to proceed with the IPO because of recent market volatility, the people said.

An IPO may exceed that in 2010 of shopping-center developer Azrieli Group Ltd., which raised the equivalent of about $520 million at the time. Sharona Mazalian Levi, a spokeswoman for Hapoalim, declined to comment.

Two factors underpin the bank’s current thinking: underwhelming bids from private investors and a desire to remain as a minority shareholder in a business that will compete with Hapoalim over retail credit in the near future, the people said.

Hapoalim and its largest rival Bank Leumi Le-Israel Ltd. are obligated to sell their credit-card businesses by 2020 under recently passed Israeli banking reforms. An IPO gives the banks another year to sell down to 40 percent.

Click here to read why Israel’s credit-card businesses are tough sells

Leumi agreed to sell its credit-card unit to Warburg Pincus for 2.5 billion shekels ($680 million) in July, a deal that is awaiting full regulatory approval.

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