Phoenix attempts to realize controlling shares in Elron after Arieli failed to meet conditions

The Arieli Group, the controlling shareholder (58.4%) of the technology investment company Elron, is not meeting the loan covenants it received to acquire control of the company from Phoenix Investment House. Calcalist has learned that for the acquisition of control over Elron, which was carried out for $53 million in September 2024, Arieli took on a debt of 90 million shekels. For the loan, Arieli pledged its controlling shares in Elron, which is traded on the Tel Aviv Stock Exchange at a value of 202 million shekels. The value of the shares at the time was double the value of the loan.

The loan terms set benchmarks that Arieli must meet. As long as Elron was traded at a value close to the value at which it was purchased, there was no problem, but then Elron began to lose value. Thus, since the beginning of the year, the company's stock has fallen by 34%. This is despite the fact that since the beginning of August, it has recovered from a larger low and risen by 25%. Phoenix Investment House approached Arieli and demanded to repay the loan or inject capital that would reduce Elron's debt-to-equity ratio (LTV) to a ratio that would meet the loan terms. In the last two months, contacts have been ongoing between Phoenix and Arieli, during which Arieli promised again and again that it was about to refinance the loan, but it did not happen.

Calcalist has learned that in the last two weeks, Phoenix Investment House (formerly Excellence) has begun offering the pledged shares for sale, that is, the controlling shares in Elron, to various institutional and private entities at a discount on the debt. However, Arieli is making an effort to obtain alternative financing of 24.5 million pounds or an injection of 20 million shekels into Phoenix Investment House to reduce the debt and the debt-to-equity ratio. If it does not succeed, the controlling shares in Elron are expected to be sold to the highest bidder. However, yesterday a financial solution began to emerge that would allow Phoenix Investment House to receive the full repayment of the loan.

Arieli is a private company, incorporated in Israel, whose ownership is divided between Lisiya Bachar Manoach, who serves as chair of Elron at 80% capacity and a monthly salary of 104 thousand shekels, Ariel Bentov, and Even Yonatan Ratov, who hold about 33% each. Elron, managed by Yaniv Schneider, holds various percentages in 17 technology companies, one of them through the company RDC, in which it holds a partnership with the government-owned Rafael in equal parts. Among the companies in which it is invested: Edgybees, which develops technology to improve electric battery performance (2.62% Elron's holding), OpenLegacy, which develops a technological platform that allows organizations to connect and innovate old and cumbersome core systems to the cloud and advanced digital services (22.2%), in which it invested $8.2 million through RDC, which is shared by it and Rafael, Axonius, BrainsGate (in which it invested $30 million), Wonder Robotics, and more.

Elron is a 60-year-old company, and the Arieli Group, a third-generation American family fund, began immediately after the acquisition with a comprehensive change that turned the company from a passive investor into an active partner. "When we entered, the portfolio companies did not receive sufficient investments. It was important for us to give them the large resources and make the changes," Bachar Manoach told Michael Lavi on the "Investment Train" podcast last May. Despite five exits by Elron in a year and a half that Bachar Manoach boasted about, the fact that its financial results are affected by its portfolio companies, and most of them have no revenue, as they are still in the development and cash-burning stages, means that Elron recorded lukewarm results. It finished 2025 due to several exits with a profit of $9.3 million and 2024 with a profit of $22.5 million after a loss of $8 million in 2023. Arieli acquired control of Elron from Discount Investment Corporation (DIC), whose major shareholders are brothers Dani and Mikey Zalkind and Mega Or of Tzahi Nahmias. The deal was led on behalf of DIC by CEO Natalie Mishan. Arieli is represented in its dealings with Phoenix Investment House by Adv. Guy Gissin, who did not respond to the report, as did Phoenix Investment House.