* Institutions buy shares for 1.6 billion shekels
* Puts value of 2.7 billion shekels on Isracard
* Isracard is Israel’s largest credit card issuer (Adds details, background, CEO quote)
By Tova Cohen
TEL AVIV, April 4 (Reuters) - Israel’s Bank Hapoalim has taken a further step in the planned flotation of its Isracard credit card unit by selling a 58.25 percent stake to institutional investors ahead of the planned sale next week to the general public.
Hapoalim said on Thursday the shares were sold for 1.6 billion shekels ($445 million), putting a total value of 2.7 billion shekels on Israel’s biggest credit card company.
Hapoalim launched the offering - one of the largest in Tel Aviv in recent years - on Wednesday.
The sale comes after Israel passed a law in 2017 requiring the two largest banks - Hapoalim and Leumi - to sell their credit card units by 2020 in a bid to reduce concentration in the lending market and lower credit costs.
U.S. private equity firm Warburg Pincus bought Leumi Card from Leumi and Azrieli Group last month for 2.5 billion shekels.
Hapoalim said that since its stake in Isracard will fall to below 40 percent after the initial public offering (IPO), by law it will have until January 2021 to divest the remaining shares.
Before the offering Isracard paid a total dividend of 867 million shekels.
“The amount of demand for Isracard shares is among the highest ever on the Israeli bourse,” Hapoalim CEO Arik Pinto said in a statement, noting this was the first IPO of a credit card firm in Israel.
Isracard is Israel’s largest credit card issuer, with annual turnover of 155 billion shekels, representing 45 percent of credit card transactions. It has 3 million customers and has issued five million credit cards.
Its net profit in 2018 rose 6 percent to 318 million shekels.
Ahead of the IPO, Hapoalim’s shares rose 3.4 percent on Wednesday.
$1 = 3.5996 shekels Reporting by Tova Cohen Editing by Steven Scheer and David Holmes