Edited by: TJVNews.com
Jared Kushner’s US private equity firm, Affinity Partners, is making its debut investment in Israel by acquiring a significant 15 percent stake in Shlomo Group’s car and credit unit, as was reported on Wednesday in The Times of Israel. The transaction, valued at NIS 570 million ($150 million), marks a substantial step for Affinity Partners into the Israeli market. The deal also signifies the continuing shift in Middle East geopolitics, as Kushner’s fund, backed by Saudi Arabia’s sovereign wealth fund, takes a stake in a prominent Israeli conglomerate, the TOI report added.
Under the terms of the agreement, a new subsidiary will be established, consolidating Shlomo Holdings’ car leasing, car rental, car sales, and credit operations. The new company will have an estimated equity valuation of NIS 3.8 billion. According to the TOI report, Shlomo Holdings will retain an 85 percent share of the subsidiary’s issued capital, while Affinity Partners, led by Kushner, will own the remaining 15 percent. However, it’s important to note that the deal remains subject to necessary regulatory approvals, as stated by both partners in a joint statement.
This investment comes against the backdrop of ongoing efforts by the Biden administration to facilitate a normalization agreement between Saudi Arabia and Israel. The TOI report noted that while Israel does not have formal diplomatic relations with Saudi Arabia, the two countries have been gradually warming to each other in recent years. Jared Kushner played a pivotal role in the negotiations that led to the Abraham Accords, which saw Israel establish diplomatic ties with the United Arab Emirates, Bahrain, Morocco, and Sudan.
“We are bullish on the long-term growth prospects of Israel and the broader new Middle East,” commented Jared Kushner. “Shlomo’s historical growth has been rock solid, and the company has many exciting opportunities in its future.”
Affinity Partners, with approximately $3 billion in assets under management, relies heavily on Kushner’s extensive connections in the Arab world, as was indicated in the TOI report. During his tenure in the White House, Kushner worked closely with Arab leaders, and earlier this year, it was reported that both the United Arab Emirates and Qatar had invested hundreds of millions of dollars in addition to the $2 billion previously deposited by Saudi Arabia’s sovereign wealth fund into Kushner’s private equity firm, according to the TOI report.
The Shlomo Group, originally founded as a family business by the late Shlomo Shmeltzer 55 years ago, started as a car rental, leasing, and automotive services company. Over time, it has evolved into a diverse conglomerate with subsidiaries spanning transport, insurance, finance, infrastructure, construction, shipping, logistics, and real estate, as was reported by the TOI on Wednesday. The group’s automotive services division boasts a fleet of over 78,000 vehicles, capturing a substantial market share of approximately 30% in the car industry.The TOI report said that its subsidiaries include Shlomo Holdings, Afcon Holdings, Shlomo Insurance, Shlomo Motors, Israel Shipyards, Shlomo Real Estate, Tadiran Telecom, and Talma Shlomo Tourism. Operating in Israel, Romania, and Germany, the Shlomo Group generated a consolidated turnover of roughly NIS 4.9 billion in 2022, employing over 5,000 people.
Commenting on the transaction, Asi Shmeltzer, Chairman of the Shlomo Group, expressed that it symbolized the realization of his late father’s vision. “Partnering with Jared Kushner and Affinity symbolizes the Middle East my father always dreamt of—a region of potential where Israel can play a critical role in its prosperity,” he said as was reported by the TOI.
Kushner’s fund is drawn to Shlomo Group’s growing and profitable operational car leasing model, which it views as adaptable and suitable for the expanding middle class in the Middle East and North Africa, according to the report. As part of the investment agreement, Affinity Partners will actively work to foster joint business ventures in the Middle East and North Africa, opening up new economic opportunities for Shlomo’s businesses in these regions.
Shmeltzer said that the “strategic partnership will unlock meaningful value for our group, specifically in the rental, leasing and credit industries.”
“The introduction of a strategic investor, such as Affinity Partners, will help us enhance our ties with businesses and identify new economic opportunities for Shlomo’s companies in the Middle East, US and other countries,” he added.
In late August, reports emerged that Affinity Partners was in discussions to acquire a 25% stake in Israel’s Phoenix Insurance Agencies for approximately $250 million, suggesting that Kushner’s fund is actively seeking opportunities in Israel’s financial sector, as was indicated in the TOI report.
This significant stake in a prominent Israeli conglomerate reflects the evolving landscape of regional relations and investments, further highlighting the potential for economic collaboration in a changing Middle East.