Sep.05, 2012 | 9:08 AM–It would certainly be premature to announce the death of Nochi Dankner’s IDB group, but if the time does arrive, there will be no reason to mourn it. Nor would there be any reason to be saddened by the loss of Delek, Africa Israel or any of the other big holding groups.
Even when they were winning businessman-of-the year-awards and buying up glitzy properties in New York, London and Moscow, Dankner and his fellow tycoons were never beloved of the media or the public. Now that the big shots are compelled to endure tongue-lashings from bondholders and the press and sell some of their most treasured assets — from marquee real estate, to cash cow businesses, to private jets — they are going to be hard-pressed to find any sympathy.
But it’s not just those hostile to capitalism that can sit back and enjoy the show. Indeed, it’s the friends of capitalism and the free market that should be applauding the demise of a phenomenon – the pyramids of Israel – whose time has long passed, just like their more famous and certainly more awe-inspiring counterparts in Egypt.
The Israeli economy has undergone a revolution over the last three decades. It’s several times larger and wealthier, and more connected to the global economy. Its financial markets have grown more sophisticated and liquid. If Israel is far from a free-enterprise paradise, the government is no longer the Hobbesian Leviathan that once dominated business and finance.
Yet through all of these changes the holding companies endured. Ownership changed hands. Bits and pieces of them were bought and sold, and old ones (like the Koor and Clal groups) faded while new ones (like Delek and Africa Israel) emerged. But the pyramids themselves have proven as durable as the ones in Giza.
Figures compiled by the government committee investigating economic concentration illustrate the preponderance of pyramids. Not counting Teva Pharmaceutical Industries, more than two thirds of publicly traded companies on the Tel Aviv Stock Exchange, as measured by their market capitalization, were in the hands of a business group. Of those, 80% belonged to a pyramid, meaning that they were in at least two levels of publicly traded companies in the group…Read More>>