American private equity firm Warburg Pincus is reportedly planning to invest ILS800m ($221m) into its newly acquired Israeli credit card business.
Warburg Pincus acquired Leumi Card from Bank Leumi and Azrieli Group in a deal valued at ILS2.5bn ($696m) in February this year. The acquired entity now operates under the brand name Max.
The investment will be made over the next five years, news agency Reuters reported.
Through this investment, the private equity firm aims to expand Max into lending space, which is currently dominated by banks, a senior official told Reuters.
In a Bank of Israel conference, Warburg Pincus European investment activities head Daniel Zilberman said he intends to offer credit to small and medium sized enterprises and to consumers, which is an area currently dominated by Israel banks.
“We believe that (MAX) can be an innovator and add to competition. We are no longer a bank-owned company funded by Bank Leumi,” Zilberman was quoted by Reuters as saying.
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Max is a credit card processor, issuer and acquirer. It has Principal Membership with both Visa and MasterCard.
With approximately $4bn in assets, the company services nearly 1.8 million card holders and supports more than 30 thousand merchants.
The sale of Leumi Card was part of the Israeli government’s plan to increase competition in the country’s banking sector.
Bank Hapoalim and Bank Leumi were directed to sell their credit card units by 2020 as part of the said plan.
Bank Leumi had an 80% interest in the card business, while the remaining stake was owned by Azrieli Group.