(Bloomberg) -- Abu Dhabi funds led by ADQ are in talks to buy a stake worth about $855 million in Israeli financial services firm Phoenix Group as the United Arab Emirates expands into the country after normalizing ties two years ago.

Private investment firms Centerbridge Partners and Gallatin Point Capital, which hold 33.44% of Phoenix, are in advanced negotiations with the Emirate funds led by ADQ that are expected to buy a 25% to 30% stake, partnering with Gallatin Point, according to a statement.

The statement didn’t provide terms of the proposed deal. Phoenix is listed on the Tel Aviv stock exchange, with a market value of $2.85 billion.

Israel and the UAE have sought ways to improve defense and economic relations since agreeing to forge diplomatic ties in 2020, in what was an historic breakthrough and hailed by the US as a step toward forging peace in the Middle East. Since the agreement was brokered, cross-border trade and deals between the two countries have steadily grown. 

Wealth fund Mubadala Investment Co. purchased of $1 billion stake in Israel’s second-biggest natural gas field last year, while Abu Dhabi’s Group 42 set up a venture with Israel’s Rafael Advanced Defense Systems Ltd. to develop artificial intelligence and big data analysis.

A number of UAE-based companies and funds have opened offices in Israel, including AI and cloud computing company G42, and the state-run Abu Dhabi Investment Office. ADQ has already invested in the Israeli lab-grown meat company Aleph Farms. 

©2022 Bloomberg L.P.