IBI Follow-Up: How Much of Alternatives Profit Is Truly Recurring?
IBI's alternatives segment grew in 2025, but almost all of the annual uplift came from performance fees booked in the fourth quarter. Hedge funds are building a cleaner recurring base, yet the filing still does not separate pure management fees from origination fees, while the off-P&L upside remains optional rather than recurring.
How much of 2025 profit is actually recurring
The main article treated IBI's alternatives arm as one of the key engines in the group, but also as the area where the headline numbers look cleaner than the underlying economics. This follow-up isolates only one question: how much of 2025 alternatives profit came from a fee base that can repeat, and how much came from performance fees, accounting timing, and funds already moving into runoff.
At first glance the year looks strong. Segment revenue rose to NIS 183.7 million in 2025 and segment profit rose to NIS 62.5 million. But there is a clear anomaly behind that result: alternative AUM fell to NIS 10.5 billion from NIS 11.0 billion a year earlier. In other words, the earnings uplift did not come from a broader asset base. It came mostly from mix and recognition timing.
Three quick findings:
- Almost all of the segment's annual revenue growth can be explained by the jump in Q4 performance fees. The year-over-year increase in Q4 performance fees was NIS 10.9 million, almost identical to the segment's full-year revenue increase of NIS 10.5 million.
- The disclosure line that comes closest to recurring revenue is still not clean. The company discloses NIS 28 million of ongoing management and origination fees together in Q4, so even that number is not a pure recurring base.
- Another NIS 57 million of performance fees sits outside the income statement, NIS 50 million in investment funds and NIS 7 million in real-estate partnerships. That is possible upside, not earnings that can already be treated as part of the base.
What matters here is not only that the segment generated more revenue on a smaller asset base. It means 2025 earnings depended less on broad balance growth and more on monetization points, performance fees, and mix. That does not make the profit fake. It does mean the reader has to separate a strong year from a stabilized earnings base.
Q4 did the heavy lifting
The Q4 breakdown makes clear how much of 2025 was a year-end story rather than a clean run-rate year. Out of NIS 68.3 million of segment revenue in the fourth quarter, NIS 33.8 million came from performance fees, NIS 28 million from ongoing management and origination fees, and NIS 5.4 million from profits of associates. The disclosed components are rounded, so they do not add up exactly to the quarterly total, but the direction is clear: almost half of Q4 revenue came from performance fees.
The issue is not that performance fees exist. For an alternative asset manager they are a legitimate layer of economics, and in hedge funds they are also proof that the product is working. The issue is the quality of what remains after stripping out the surprise element. Segment profit in Q4 jumped to NIS 34.7 million from NIS 20.5 million, yet full-year segment profit increased by only NIS 2.3 million. That means the fourth quarter delivered a sharp lift while other parts of the segment were operating in weaker background conditions and absorbed much of that benefit.
This is where the disclosure problem matters. The company does not split pure management fees from origination fees. So the NIS 28 million disclosed for Q4 cannot simply be called the new run rate. At best it is an upper bound for the more repeatable part of revenue, and even that upper bound still includes a transaction-driven element.
The operating backdrop explains why. High rates persisted through most of 2025, pressuring real-estate assets and lower-rate credit strategies and making exits harder. At the same time hedge funds benefited from rising markets, a lower risk premium on Israeli assets, and broader trading volumes. So 2025 reads like a year in which one part of the segment, mainly hedge funds, pulled the top line higher while some of the less liquid funds remained slower.
There is upside outside the P&L, but it is not the base
The note on unrecognized performance fees is one of the most important pieces in the entire earnings-quality discussion. At year-end 2025 there were NIS 50 million of unrecognized performance fees in investment funds and another NIS 7 million in real-estate partnerships. The reason is straightforward: under IFRS 15 the company only recognizes performance fees when it believes there is a high probability that no material reversal will occur.
That creates a double temptation. On one hand it is easy to look at those NIS 57 million and call them delayed profit that has not yet hit the accounts. On the other hand, the company explicitly says it cannot estimate when those amounts will be recognized, what their final size will be, or whether they will be recognized at all. So treating them as normalized earnings today would be a mistake.
| Earnings layer | Amount | Status | What it means |
|---|---|---|---|
| Performance fees recognized in hedge funds during 2025 | NIS 42.1 million | Recognized | Directly boosted 2025 earnings |
| Unrecognized performance fees in investment funds | NIS 50 million | Not recognized | Possible upside with uncertain timing and final amount |
| Unrecognized performance fees in real-estate partnerships | NIS 7 million | Not recognized | Especially sensitive to exit timing and asset valuations |
DataCom is a good example of that gap. The presentation flags roughly USD 11 million of still-unrecognized performance fees in the fund, while at the same time DataCom 2 has already been launched. In plain English, that means there is both a seed for future growth and a pocket of potential profit that still has not crossed the recognition threshold. That supports the broader alternatives thesis, but it does not mean 2025 earnings have already repeated.
Not all AUM carries the same earnings quality
If the goal is to find a cleaner recurring earnings base, the right place to start is not the 2025 bottom line but the structure of assets under management. Here the segment already splits into two very different worlds.
On one side, hedge-fund AUM reached roughly NIS 1.6 billion at the end of 2025, up from NIS 798 million at the end of 2024 and NIS 312 million at the end of 2023. Management's presentation points to a NIS 2.2 billion target by the first quarter of 2027. This is the clearest path to a more repeatable fee base because these products are more liquid, more open-ended, and structurally better suited to ongoing management-fee income if AUM actually holds and grows.
On the other side, a meaningful part of the segment still sits in funds that are not evergreen by design. Funds explicitly marked as being in liquidation hold NIS 2.465 billion of managed investor capital: CCF 2024 with NIS 914 million, CCF C1 with NIS 345 million, SBL with NIS 266 million, Alternativ with NIS 11 million, and ComRit with NIS 929 million. That is already 23.4% of total managed capital in the alternatives segment.
| Fund in liquidation | Managed investor capital as of December 31, 2025 | What it means for earnings quality |
|---|---|---|
| CCF 2024 | NIS 914 million | A fee base tied to realization and capital return, not only to fresh fundraising |
| CCF C1 | NIS 345 million | A mature fund that is no longer expanding its fee base |
| SBL | NIS 266 million | Revenue that can erode as runoff continues |
| Alternativ | NIS 11 million | Small residual activity |
| ComRit | NIS 929 million | Material exposure to a liquidation-stage fund |
| Total | NIS 2,465 million | A meaningful part of the segment is not built on an open-ended growth base |
Pillar shows the same principle from a different angle. In 2025 the company reported 40 real-estate investment partnerships, while also stating that 5 of the 45 partnerships reported a year earlier had already realized their assets. So here too, part of the revenue model is linked to fund life cycle and transaction timing, not just to a rolling open-ended AUM base.
That is the core of the continuation thesis. IBI's alternatives segment is already large, diversified, and backed by a real distribution platform. But the earnings quality in 2025 still rests on a blend of three very different layers: management fees that repeat, origination fees tied to transactions and launches, and performance fees that are recognized only when the market, valuations, and exit timing allow them to be.
Bottom line
Alternatives profit in 2025 is good profit, but not yet clean enough to call a new base. There is real progress in the shift toward more liquid products and hedge funds that are already generating both AUM and performance fees. At the same time, the company still does not disclose pure management fees separately, part of the revenue sits on funds already in runoff, and another NIS 57 million of performance fees remains outside the financial statements with completely open timing.
So the right reading of 2025 is neither that the recurring earnings base is already fully there nor that everything was one-off. The better reading is that this is a bridge year between an alternatives model that depended more heavily on realizations and closed funds, and a platform that could gradually lean more on liquid, open-ended, well-distributed AUM. For that reading to strengthen in 2026, IBI will need to show further hedge-fund AUM growth, real use of the NIS 500 million Quality Long framework, and cleaner separation between recurring management fees, origination fees, and performance fees.
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