Milei insists on approaching Eduardo Elsztain. Someone tell him that, apart from being a f …
The palm trees are the tree of the desert and remember, in an Israel crossed by state-of-the-art roads and brand new buildings that compete in height, where they started. The palm tree is called tamar. In Hebrew it means the culmination of bitterness by the sweet fruit it offers. It could be said that Eduardo Elsztain is living his own culmination of bitterness these days after a process of several years that led him to become one of the greatest entrepreneurs in Israel. A conversation in the Llao Llao was the starting step for him to take control of IDB which, with a turnover equivalent to 5% of the Israeli GDP, was the main economic group. Of course, at that time, in 2012, it carried a debt of US$10 billion.
Although its size was reduced, IDB’s businesses in supermarkets and pharmacies, telecommunications, high-tech companies, an airline, fields and in the increasingly powerful real estate development, generate US$ 3.1 billion annually. Elsztain, who with Irsa in Argentina is in the top five for his participation in shopping malls, emblematic properties, a million hectares, in addition to the Mortgage and a pearl like the Llao Llao, went through a Sinai in negotiations. He reduced IDB’s debt to $4 billion, sold the 5% owned by Irsa from Credit Suisse, injected $750 million and in the end IDB was healed. Decidedly, the flight exceeded the wings.
This businessman grew up buying Israel’s jewels based on taking debt in a process known as leveraged buyout, one of whose exponents was the Exxel Group in Argentina with companies that ended up in bankruptcy. Nochi stayed at the Llao Llao when he visited his son who was celebrating in Bariloche having finished his military service in Israel. In a conversation overlooking Nahuel Huapi, he told Elsztain about his regrets. Irsa decided to enter IDB through a small window with a disbursement of US$25 million. It was 2012 and while the Argentine economy threatened to shut down, an immense challenge was born in Israel with a much more competitive capitalism and an effective and fast justice in its decisions, Irsa executives describe. Since 2017, Nochi Dankner has been imprisoned for having inflated the price of the group’s shares.
Among the assets of IDB are from the building that is the headquarters of the HSBC in Manhattan to the Tivoli casino in Las Vegas.
One of its diamonds is the pension and insurance company in Israel, which is the second in the market and manages $40 billion. It is an important figure if you consider that Israel’s pension system adds up to US$450 billion, for its 9 million inhabitants. Almost the same as the Argentine GDP
The beginnings were very arduous. Irsa landed with a team of ten people under the baton of Elsztain supported by Saúl Zang, Mario Blejer, the former president of the Central Bank, Mauricio Wior, Saúl Lapidus and Gerardo Tyszberowicz. Elsztain divides his time between Israel and Argentina, Blejer continues as an advisor, Lapidus is the CEO, Wior is in charge of telecommunications and Tyszberowicz is one of its managers.
In a few days they move to the new iconic building in Tel Aviv, the Toha, which they built in record time and was designed by the architect Ron Arad, inspired by an iceberg. With an economy that grows to 3% per year in a sustained way, without inflation and a shekel, its currency, overvalued, the cost of money is several times lower than that of Argentina. The credits are in long-term shekel with a fixed rate of less than 4%. The Toha, whose name appeals to what comes out of the earth, has 57,000 square meters and its 3,000-meter apartments are already rented, especially to technology firms, others such as Intel and Motorola and WeWork. But the bread and butter of Gavyam, the real estate of the IDB group, are its technology parks. There are 19 in 16 different cities.
The Shufersal supermarket chain, with a discount format, nearby stores, large supermarkets and even special places for religious, is the number one in Israel with 26% of the market, 15,000 employees, 347 stores, its own card with 1.8 million members and revenues of US$ 1 billion per year. They have just added a chain of Farmacity-style pharmacies with 81 stores. With repositor robots, automatic boxes and staff that works as a shopping consultant orienting where the offers are, it indicates the future of the business in Argentina. They are currently accelerating the conversion, boosting the online sale that represents 17% of them. One of the secrets is its distribution center. Strategically located in the center of Israel with several floors in height, it is managed by robots that rate what arrives and order orders according to the branch. The robots dialogue with each other. If one sector is missing a certain product, another will take care of taking it. “The intelligent management of an inventory with 20,000 items is what allows us to negotiate the best prices with our suppliers and transfer the benefit to the customer,” says Tyszberowicz. “Robots resolve a delivery order in 35 seconds. The trained human does it in 5 minutes,” he adds.
A separate chapter is the high-tech companies in which IDB invested. Ari Bronshtein shows a small pill that contains a camera. As if it were a simple medicine, it is taken with water and travels through the human body, detecting problems in advance. That pill was developed thanks to the transfer of technology for military use and the scientists of Technion, the technological university. Elron, IDB’s technology fund, signed an agreement with Rafael, the company dedicated to discoveries for the military industry: Elron achieved the priority for the use of those advances for peaceful purposes. The farm in the country of the kibbutz is another of the business of IDB.
Forward, Irsa will detach itself from some IDB assets to focus on businesses such as real estate development and mass consumption, in addition to technological ones. According to analysts, IDB’s Achilles heel is that it is too exposed to the domestic market and that Israel’s economy is still doing well. In Irsa they reply that being a country linked to high export technology, its only weakness is the shortage of talent and that companies are then forced to move to other countries.
Irsa of Argentina, the owner of IDB in Israel
Irsa, who in Argentina owns 29.91% in Banco Hipotecario, investments in the most emblematic buildings, the main shopping malls and one million hectares of the best lands in Argentina, is the owner of 100% of the Israeli company IDB.
IDB is one of the largest and most diversified holding companies in Israel.
It includes a chain of supermarkets and pharmacies, telecommunications, an insurance company, investments in real estate, agriculture, tourism and technology.
Its assets are valued at $11 billion and its workforce amounts to 22,000 employees.
One of the IDB companies is Mehadrin with more than 5,000 hectares between its own and rented has become one of the main producers in Israel, a country with the size of the province of Tucumán and 9 million inhabitants. The company generates US$ 300 million in revenue and exports to the United States, Canada, Europe and Japan.
Israir Airlines is another company of the IDB group. Its headquarters is located in Tel Aviv. And it operates flights from Ben Gurion airport to Europe and Asia.
