Affinity Partners headed by Jared Kushner, the son-in-law of former US president Donald Trump, will invest about NIS 570 million for the continued development of vehicle and credit activities of Shlomo Group.
This will be the first investment in an Israeli company by Affinity Fund, which was founded by Kushner in 2021. Saudi Arabia, which invested $2 billion in Affinity Partners last year has granted approval for the current investment in Israel.
Shlomo Group chairman Asi Shmeltzer said, “This is a significant and strategic step and is a historic landmark in the group’s international activities and a tremendous potential for adding value, in particular in the areas of rental, leasing and credit.
“The entry of an investor of strategic value, such as the Affinity Fund, will help us expand our ties for businesses and find new economic opportunities for the group’s companies in the Middle East, the US and other countries.
“We are confident in the long-term growth forecast for Israel and the entire new Middle East,” added Jared Kushner, “Shlomo Group’s historical growth has been solid and its future holds many exciting opportunities.”
Shlomo Group reported that the investment agreement with Kushner’s Affinity Partners is for a 15% equity stake in the Group’s vehicle and credit activities, at a company valuation of NIS 3.8 billion.
Under the terms of the agreement, a new subsidiary will be set up, which will incorporate joint activities (85% Shlomo Group and 15% Affinity)in leasing, rental, sales and credit.
The entities agreed on a value adjustment mechanism based on future results so that the fund’s holding in the new company will not exceed 18%. The fund will appoint a director and an observer on the new company’s board of directors.
Shlomo Group, Affinity Partners’ shareholders’ agreement
Shlomo Group and Affinity Partners have also entered into a shareholders’ agreement that the new company will adopt a dividend distribution policy.
Starting from the fifth year after the completion of the deal and for a period of three years, the fund will be entitled to ask Shlomo Group to purchase all of its holdings in the new joint venture at market price, in accordance with the mechanism agreed upon between the parties. If the Shlomo Group chooses not to purchase the holdings from the fund, the fund will be entitled to demand an initial public offering (IPO) of the company on the stock exchange.
It was also decided that to the extent that the fund works to promote deals by the joint company in countries in the Middle East and North Africa, the fund will be entitled to a distribution of profits from these deals under conditions agreed upon between the parties.
The deal is subject to obtaining the required approvals.