Atreyu Capital Markets in the First Quarter: Yelin Lapidot’s Dividend Again Funds the Parent Payout

Atreyu Capital Markets delivered a first quarter that strengthens the underlying asset and partly repairs the weakness exposed at the end of 2025, without changing the nature of the company: this is a financial holding company whose profit is recorded through Yelin Lapidot, while cash arrives when Yelin Lapidot distributes. Atreyu's share in Yelin Lapidot's profit rose to NIS 30.8 million, and the parent company's net profit rose to NIS 29.9 million, so the investment-house engine is still working. Cash movement is more important than the accounting improvement: Yelin Lapidot declared a NIS 70 million dividend in the quarter and another NIS 73 million after the balance-sheet date, while Atreyu declared two NIS 35 million distributions of its own. The gap from the prior year, between accounting profit and cash that actually moves up to the parent, received a better answer this quarter. At the same time, Atreyu had only NIS 2.2 million of cash at the end of March and negative operating cash flow of NIS 1.1 million before the April dividend receipt. The next few quarters need to show whether the decline in Yelin Lapidot's assets under management, from NIS 166.1 billion at year-end 2025 to NIS 160.0 billion at the end of March, is a temporary swing or the beginning of pressure on management fees. Until then, the current read is more positive than at year-end 2025, and still depends on dividend decisions made down at Yelin Lapidot.

A Holding Company Around One Asset

Atreyu Capital Markets is effectively a holding company around one asset: half of the economics of Yelin Lapidot, an investment house active in portfolio management, provident funds and mutual funds. The company owns 50% of Yelin Lapidot's share capital and 50% of its management shares through a wholly owned subsidiary, but two management shares held by Atreyu are suspended under the 2018 shareholders agreement. Dov Yelin and Yair Lapidot are entitled to appoint together most Yelin Lapidot board members, so Atreyu does not control Yelin Lapidot in the legal and accounting sense.

The business meaning is simpler than the legal structure. Atreyu benefits from half of Yelin Lapidot's profit, and the pace of cash distributions is decided one level below it. It accounts for the investment under the equity method, so Atreyu's income statement shows its share in Yelin Lapidot's profit while the investment house's revenue and expense base remain in Yelin Lapidot's own statements. On the balance sheet, the central asset is the investment in Yelin Lapidot. At the end of March 2026 it stood at NIS 267.6 million, against NIS 269.6 million of parent-company equity.

This is a cash-return holding equity. The important parameters are Yelin Lapidot's profit, dividend decisions there, and the cash that remains available at the parent after distributions to shareholders. That was also the central issue after the prior annual analysis, and the deeper look at Yelin Lapidot's dividend mechanism showed why a 50% economic holding is not the same as full control over the cash tap.

Yelin Lapidot Is Producing More Revenue On A Lower AUM Base

The good news in the quarter is that profit did not depend on a convenient financial line. Yelin Lapidot's management-fee revenue totaled NIS 233.6 million, compared with NIS 210.2 million in the comparable quarter, up 11.1%. Mutual funds were the standout engine, with revenue rising to NIS 74.8 million from NIS 61.0 million, about 22.6%. Provident-fund revenue rose to NIS 139.7 million from NIS 131.4 million, and portfolio-management revenue rose to NIS 19.1 million from NIS 17.8 million.

That split matters because Yelin Lapidot's profit grew while net gains from financial assets at fair value through profit or loss fell to only NIS 0.4 million, compared with NIS 2.6 million in the comparable quarter. The profit increase came mainly from the investment-management activity itself. Operating, selling, G&A and administrative expenses rose to NIS 154.1 million from NIS 141.9 million, an 8.6% increase, below the pace of management-fee growth. Profit before finance income therefore rose to NIS 79.9 million from NIS 70.9 million, and Yelin Lapidot's net profit rose to NIS 61.7 million from NIS 54.0 million.

The figure that prevents an overly clean conclusion is assets under management. Yelin Lapidot ended March 2026 with about NIS 160.0 billion of net AUM, compared with NIS 166.1 billion at the end of 2025. Revenue still grew nicely versus the comparable quarter, but the quarter-end base was already below the level at which the year began. In a company that earns management fees from managed assets, that ending base deserves more attention than one quarter of net profit.

The first quarter proves good operating quality, but not immunity. Stabilization in AUM would allow fee revenue to keep supporting Atreyu's profit. Another decline would make the revenue improvement versus the comparable quarter look more backward-looking than run-rate.

The Dividend Is Again Moving Up The Chain

The analytical anchor of the quarter is not only Atreyu's NIS 29.9 million net profit. The anchor is the near-perfect match between the dividend coming from Yelin Lapidot and the dividend Atreyu passes on to its shareholders. On March 26, 2026, Yelin Lapidot declared a NIS 70 million dividend. Based on Atreyu's holding, this created a NIS 35 million dividend receivable for Atreyu. Three days later, Atreyu declared a NIS 35 million dividend to its own shareholders, paid in April.

After the balance-sheet date, a second round followed. On May 27, 2026, Yelin Lapidot declared a NIS 73 million dividend. Based on the same 50% holding, Atreyu's economic share is about NIS 36.5 million. On May 31, 2026, Atreyu declared another NIS 35 million dividend. That timing strengthens the conclusion that the dividend from below can again fund the parent company's payout policy.

Profit and cash still have to be separated. On an all-in cash-flexibility basis after the quarter's actual cash uses, Atreyu ended March with only NIS 2.2 million of cash, compared with NIS 3.3 million at year-end 2025. Operating cash flow was negative NIS 1.1 million, and the NIS 35 million Yelin Lapidot dividend was recorded as a receivable and received only in April. At the same point, Atreyu also had a NIS 35 million dividend payable to its shareholders.

The company is not leveraged. It has no financial debt to banks or any other financing body. The pressure sits in cash timing and access, not in an imminent maturity or covenant. As long as Yelin Lapidot distributes, Atreyu can pass cash to shareholders with almost no use of its own balance sheet. A weaker distribution pace would quickly return the parent to a structure in which profit looks higher than the cash actually available at the holding-company level.

The Risk Sits In AUM And Dividend Pace

Yelin Lapidot's balance sheet looks strong at the end of the quarter: NIS 352.1 million of cash and cash equivalents and NIS 179.2 million of financial assets at fair value through profit or loss. Even after a NIS 70 million dividend payable, the investment house holds a meaningful liquidity cushion relative to the dividend declared. The main risk sits on the future revenue side: Atreyu and Yelin Lapidot state that the security escalation around Operation Roaring Lion may lead to withdrawals and redemptions from managed assets, and the managed-asset base had already declined by the end of March.

The first quarter improves Atreyu's position versus the end of 2025. Yelin Lapidot continues to generate strong operating profit, profit growth did not come from a random financial fair-value gain, and the dividend moving back up the chain allows Atreyu to distribute to shareholders without relying on financial debt. The next proof point is straightforward: preserving Yelin Lapidot's AUM base and continuing dividends at a pace that covers Atreyu's own distributions. If either weakens, the gap between accounting profit and parent-level cash will again become the central issue.