Direct Financing, a prominent Israeli financial services company, is acquiring an 85% stake in Sigma City, a real estate lending firm, for approximately 34 million Israeli shekels (about $9.2 million USD), the company announced this week. The transaction marks a strategic expansion into the real estate lending market for Direct Financing’s subsidiary, Direct Financing Real Estate and Mortgages, which will simultaneously extend owner financing of approximately 29 million shekels to Sigma City as part of the deal structure.
The acquisition arrives at a moment of significant growth for Direct Financing. The parent company reported a 324% surge in net profit during the second quarter of 2026, signaling robust market conditions in the Israeli financial sector. The addition of Sigma City’s existing loan portfolio—valued at approximately 153 million shekels—represents a major consolidation of real estate lending assets, bringing Direct Financing’s total new credit commitments in this transaction to roughly 41 million shekels when including the owner financing component.
The Israeli Real Estate Finance Landscape
Real estate financing in Israel has become increasingly competitive as traditional banks have tightened lending criteria and institutional investors seek higher-yielding opportunities. Direct Financing’s move reflects broader trends in the Israeli financial sector, where non-bank lenders and specialized finance companies have captured growing market share in mortgage and real estate credit. The company’s subsidiary structure allows for specialized focus on real estate lending while maintaining regulatory separation from other financial services. Sigma City’s existing portfolio of 153 million shekels in loans suggests an established customer base and operational infrastructure that Direct Financing can leverage across its broader financial network.
The owner financing component of the deal—where Direct Financing extends 29 million shekels in credit to Sigma City as part of the purchase—is a common structuring mechanism in Israeli M&A transactions, particularly in the financial services sector. This approach allows the acquiring company to align incentives with the sellers while managing cash outlay at the time of closing. It also signals Direct Financing’s confidence in Sigma City’s ability to service additional debt obligations.
Market Growth and Strategic Positioning
Direct Financing’s exceptional quarterly profit growth—up 324% year-over-year in Q2—suggests strong demand for alternative real estate financing in Israel. This expansion into Sigma City comes as the Israeli real estate market continues to show resilience despite broader economic uncertainties. The acquisition positions Direct Financing as a more comprehensive real estate finance provider, competing not only with traditional banks but also with other non-bank lenders that have emerged in recent years.
The company’s willingness to deploy significant capital for this acquisition, coupled with its subsidiary’s aggressive pricing for owner financing, suggests management’s bullish outlook on the Israeli real estate market over the coming years. This strategy mirrors moves by other Israeli financial services companies seeking to consolidate position in high-growth market segments.
What Lies Ahead
Investors and market observers will be watching how Direct Financing integrates Sigma City’s operations and whether it can maintain the acquisition’s profitability while expanding the combined entity’s lending volume. The near-term focus will likely be on operational integration and cross-selling opportunities to leverage Direct Financing’s broader customer base. The coming quarters will reveal whether this acquisition proves to be a successful diversification strategy or merely a consolidation play in a competitive lending market.
Source: Globes — Translated and expanded by Israel Daily Journal
