Direct Finance Acquires 85% of Sigma City for 34 Million Shekels
Direct Finance is acquiring an 85% stake in Sigma City Real Estate Financing for 34 million shekels, committing a total of 63 million shekels including owner loans to expand into real estate mezzanine financing.
Direct Finance, led by CEO Eran Golan, is expanding its non-banking credit operations into real estate entrepreneurial financing. Its subsidiary, Direct Finance Real Estate and Mortgages, has signed an agreement to acquire 85% of the share capital of Sigma City Real Estate Financing on a fully diluted basis for approximately 34 million shekels, valuing 100% of the shares at around 40 million shekels.
In addition, Direct Finance will provide Sigma City with owner loans totaling approximately 29 million shekels, bringing the total commitment in the transaction to about 63 million shekels. The remaining 15% of the shares will remain in the hands of Sigma City managers Ori Dayan and Natan Tuviana, who will continue in their roles following the completion of the transaction. The completion is subject to conditional terms, including obtaining an updated control permit from the Capital Market, Insurance and Savings Authority and approvals from Sigma City's financing banks.
A Different Risk Profile
Sigma City, a private company established in 2015, provides financing for residential construction projects. Its activities include mezzanine capital completions for developers in urban renewal and financing projects after receiving a building permit with the accompaniment of a financial corporation. The loans allow developers to provide part of the required equity through credit and are primarily intended for small and medium-sized developers. As of June 30, 2026, the company's loan portfolio, including accrued interest, stood at approximately 153 million shekels.
This is a field with a different risk profile from Direct Finance's core operations—car loans and mortgages for private customers. Mezzanine financing is subordinate to bank financing and therefore carries a higher interest rate alongside higher risk. Sigma City's board of directors includes several veterans of the Israeli capital market, including Ezra Atar, former CEO of Bank Hapoalim's mutual funds company, who serves as chairman and founding partner, as well as Shmuel Massenberg, a former senior banking executive.
A Successful Quarter for Direct Finance
"The acquisition comes after a successful quarter for Direct Finance, which helped the stock jump by 30% in the last half year to a market cap of 2 billion shekels."
Net profit in the second quarter of 2026 totaled approximately 74.3 million shekels, a growth of about 324% compared to the corresponding quarter last year, and net profit attributable to shareholders reached approximately 68.7 million shekels, an increase of about 329%. The car loan sector recorded a net profit of approximately 37.4 million shekels, five times the parallel quarter.
The mortgage company recorded a net profit of approximately 37 million shekels, compared to about 10.1 million shekels in the parallel quarter. However, about 16.8 million shekels of this stemmed from a securitization transaction of second-tier mortgage portfolios, the first of its kind completed by the company. Net of securitization, the profit stood at about 20.2 million shekels—still a growth of about 100%. The volume of loans provided to customers during the quarter reached about 3.14 billion shekels, an increase of about 29%, and the weighted credit loss rate dropped to about 3.04%, compared to about 3.85% in the parallel quarter. The company announced a dividend distribution of about 48.1 million shekels regarding the quarter's profits.
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