The Peninsula Group has acquired Union Bank’s diamond credit portfolio, currently valued at $91 million, according to Yigol Arnon, the law firm that represented the Peninsula Group.
The portfolio could be valued at up to $250 million if all the credit lines were utilized.
In return, Peninsula will pay an amount equal to the size of the credit portfolio at the time of completion at a discount of between 30% and 45%, subject to the size of portfolio at the time of closing.
According to the law firm, the portfolio also includes bad and doubtful debts amounting to more than $160 million, which will be transferred to Peninsula without any consideration.
According to its website, Union Bank accounts for approximately 25% of the loans in the Israeli diamond sector, making it the dominant lender in the sector.
Peninsula, part of Meitav Dash, provides credit to small and medium-size businesses in Israel.
Union Bank is trying to merge with Mizrahi Bank, and divesting itself of its credit portfolio was set as a condition of the Israel Competition Authority. The transaction is subject to specified conditions and particularly the completion of the merger between the banks.
Yoram Dvash, president of the Israel Diamond Exchange and acting president of the World Federation of Diamond Bourses, said in a statement that he “congratulated” Peninsula on the deal.
“For about three years, we fought to bring in another lending institution to provide credit to the diamond industry,” he said. “The struggle was waged on various fronts, vis a vis the Ministry of Finance and the Antitrust Commissioner. I am glad that in the end our efforts led to an important achievement for the Israel Diamond Exchange, while creating competition in the diamond credit market. I wish the Peninsula company great success, and thank Union Bank for their long years and hard work with the Israeli diamond industry. “
(Image courtesy of Union Bank)
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