Four years after selling its stake in Meitav and missing a meteoric rise: Ayalon returns to the provident fund sector

Tomorrow, Ayalon will launch its provident fund activity, thereby returning to the long-term savings sector just four years after completely disconnecting from it. The move comes after the company sold its stake in Meitav Provident and Pension — a deal that turned out in hindsight to be a missed opportunity regarding one of the provident fund companies that became the largest in Israel. Ayalon will be the first significant entity to enter the sector since the entry of More Investment House in 2019. Since then, the market has been characterized mainly by mergers, acquisitions, and a reduction in the number of players.

Ayalon's provident funds already appear on the Capital Market Authority website, so technically, funds can already be deposited into them. Product details have also been uploaded to the company's website, including training funds, provident funds for the self-employed and employees, and provident funds for investment. In total, Ayalon will manage 30 tracks. Ayalon established the provident company after receiving approval from the Capital Market Authority in March. Until now, the company, under CEO Sharon Reich, managed only savings policy activity, amounting to about 7 billion shekels, which are ranked first in the five-year range with a cumulative return of 87.5%.

The entry into the provident sector is intended to expand the exposure of Ayalon, which is controlled by Wishur Globaltech, to the long-term savings market and to try to replicate its success there in the field of savings policies. Savings policies currently manage close to 130 billion shekels, compared to about 70 billion shekels in provident funds for investment. Both products serve as an alternative for short-to-medium-term savings, but there are fundamental differences between them. Savings policies are marketed only by insurance companies, through insurance agents who receive a commission on every sale. Because of this, management fees in them are usually higher than those of provident funds for investment, and the product tends to show a lower return.

Ayalon was founded by Levi Rachmani in 1976 and went public on the stock exchange in 1987. After Rachmani's death in 2020, his heirs sold control of it (67%) to Wishur for 447 million shekels and at a valuation of about 670 million shekels. The return to the provident sector is particularly prominent against the background of the decision made by Ayalon about a decade ago to exit almost completely from the long-term savings field, a move in which it merged the provident funds and pension funds that managed about 7 billion shekels at the time into Meitav Dash, with Ayalon remaining with a stake of only 20% in the merged company. Later, in 2018, the company also sold the Ayalon Investment House for 12 million shekels. In June 2022, Ayalon completed its exit from the field when it sold to Meitav the remainder of its stake — 20% of Meitav Provident and Pension — for 120 million shekels, at a valuation of 600 million shekels. In hindsight, it turned out to be a particularly problematic timing. According to PwC's valuation estimates, the value of Meitav Provident and Pension rose from 600 million shekels at the time of the deal to about 968 million shekels in September 2023, to 1.2 billion shekels in September 2024, and to 2.8 billion shekels in September 2025.