Saturday, Aug 14, 2010

(This story was originally published Thursday.)

JERUSALEM (Dow Jones)--Israel's IDB Holding Corp. Ltd. (IDBH.TV) said Thursday it will join Qatari and Saudi funds, and Swiss lender Credit Suisse (CS), in creating a $1 billion fund to invest in emerging markets.

IDB units Koor Industries Ltd. (KOR.TV) and Clal Insurance Enterprises Holdings Ltd. (CLIS.TV) will together invest a total of $250 million in the fund, each contributing $125 million, IDB said.

The fund, called the Credit Suisse Emerging Markets Opportunity Fund, is still being established and aims to invest in developing markets in Asia, Latin America, the Middle East and Europe, IDB said.

The three other contributors to the fund are Credit Suisse, the Qatar Investment Authority--a sovereign wealth fund established by the government of Qatar--and The Olayan Group, a Saudi-Arabia based private multinational enterprise, each of which will also invest $250 million, IDB said. All four participants hold stakes in Credit Suisse.

Qatar and Saudi Arabia are still technically part of the Arab League's boycott against Israel, launched in 1951, in support of Palestinian rights after the 1948 establishment of Israel, but in recent years, more companies have been breaking the boycott, which isn't legally binding.

"The Arab boycott is mainly on paper," said Doron Peskin, head of research at Info-Prod Research Ltd., an Israeli business consultancy specializing in the Middle East and North Africa. "There is a flow of Israeli know-how and products to the Arab world." He said exceptions to this include Lebanon, Syria and Libya, which tend to enforce the boycott. Peskin said too much public attention focused on Israeli cooperation with Arab business people and companies often hurts the Arab parties, who are often under public pressure not to work with Israelis and Israeli companies.

"They have their own interests and public opinion, and we should respect that," and remain quiet about cooperation, Peskin said.

Each of the four participants will appoint a representative to sit on a board together, and IDB's representative will be its chairman Nochi Dankner. Danker said that the fund is a good opportunity for IDB that will help expand its presence in Asia.

Koor owns 3.24 % of Credit Suisse; Olayan owns 6.6%, and Qatar Investment Authority owns 8.9%.

At 1109 GMT, shares of Koor were down 2.80 shekels, or 2.20%, at ILS79.84 ($21.01); shares of Clal were down ILS0.66, or 0.84%, at ILS77.76, and shares of IDB were down ILS0.70, or 1.75%, at ILS100.50, in a lower Tel Aviv market.

-By Sara Toth Stub, Contributing to Dow Jones Newswires, saratoth@gmail.com

(END) Dow Jones Newswires

14-08-10 0719GMT