Barak Capital Briefly Takes Substantial Stake in Bank Hapoalim Amid Complex Institutional Hedging
Barak Capital briefly acquired a substantial stake in Bank Hapoalim, highlighting how Israeli institutional investors use derivative instruments with proprietary traders to bypass statutory ownership limits on bank shares.
Barak Capital, a prominent Israeli nostro trading firm owned by Eyal Bakshi and his wife Ronit, recently acquired shares in Bank Hapoalim for approximately NIS 35 million, temporarily making them a substantial controlling shareholder with 2.46% of the bank's capital and 2.52% of voting rights, valued at about NIS 2.4 billion. Days later, the firm sold shares worth roughly NIS 28 million, reducing its voting stake to 2.47% and relinquishing its controlling status. This transaction highlights the intricate financial mechanisms utilized by institutional investors in Israel.
Institutional investors managing public savings, such as pension funds and provident funds, face strict regulatory limits capping direct holdings in Israeli bank shares at 5% without special authorization from the Bank of Israel, or up to 7.5% with approval. To bypass these restrictions and gain additional exposure to banking yields without exceeding ownership caps, institutions partner with nostro trading powerhouses like Barak Capital. Through complex derivative instruments such as swap agreements and futures, these firms provide the necessary hedging services, allowing institutions to enjoy stock performance without directly holding the underlying shares.
Eyal Bakshi, who began his career trading commodities and derivatives in the US before founding his proprietary trading firm in 1996, has grown Barak Capital into one of the largest nostro players on the Tel Aviv Stock Exchange. Operating with sophisticated algorithmic systems and a team of traders utilizing company capital rather than client funds, the firm became the TASE's first nostro exchange member in 2020. Additionally, Barak Capital operates extensively in the underwriting sector through its partnership with Bank Leumi in Barak Leumi Underwriting, cementing its vital role in the Israeli capital market.
