Wednesday, November 10, 2010

Leviev to Float in Poland

I do not normally discuss matters that relate to real estate. I am not going to depart from this custom here, even though the company in question is in the real estate business.

Lev Leviev has several public companies trading on different international stock exchanges, and also owns private companies. This in of itself is innocent enough.

What complicates matters (for me at least) is the fact that there is overlap between these various entities, and with particular reference to his private company interests, which are of course not transparent to the shareholders in the public companies.

Sadly, I am not the naive guy I once was! This leads me to the possibly cynical, but at best skeptical position, whereby I do not have full trust in managers/owners of businesses who have one business for the shareholders and a separate private business for themselves. Unfortunately there can be slips leading to a serious conflict of interest between someone like Leviev and the shareholders in his various public entities.

I add to the above fact that Africa Israel, his main public company, listed in Israel, is still very much in the overhang period following one of the largest debt restructuring stories in Israel's history.

It only partially surprises me that he plans to IPO one of his vehicles on the Polish stock exchange.

I would strongly urge Caveat Emptor (buyer beware) - aligning management, controlling and passive shareholders interests is one of the best ways of avoiding the types of mess that we have seen unfold during the recent financial and real estate meltdown!

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