The Israeli government is moving forward on a privatization plan for the Postal Company, which has been a losing proposition in recent years.
The ministerial privatization committee is set to discuss on Sunday a proposal by Minister of Finance Moshe Kahlon and Minister of Communications Ayoob Kara for a two-stage privatization, already approved by Kahlon in principle, Globes reported on Thursday.
The Israel Postal Company has suffered from unfavorable market trends. The annual volume of mail has dropped an average of 8 percent, attributed to electronic substitutes such as email and text messages.
While the IPC has sought to take advantage of a boom in package deliveries via e-commerce, it has not been enough to offset the decline in regular mail.
In addition, the company’s management and structure are thought to be a contributing factor to declining revenues, though no senior officials were named as being at fault.
In the first stage of privatization, 20 percent of the Israel Postal Company’s shares will be sold to an investor from Israel or overseas in a private placement. The maximum number of directors on the company board at this stage will be 11, three of whom will represent the buyer or be recommended by him or her, depending on the appointment mechanism established.
In the second stage, 20 percent of the IPC’s shares will be issued on the Tel Aviv Stock Exchange (TASE). Following the offering, the maximum number of directors on the company boards will be 12, only two of whom will be from the private placement purchaser.
The second stage is to take place within two years of the completion of the private sales, through an offering to the public via a prospectus that will include an offer for sale by the state and/or a financing round for the company on the TASE. After both stages are completed, the state’s fully diluted share will not fall below 60 percent.
The Government Companies Authority, which has oversight of the privatization, hopes that bringing a strategic investor into the IPC and then offering its shares on the TASE will promote transparency, efficiency and long-term profitability.