Chinese billionaires to bring their wallets to Israel

While VC and angel investment money has been getting harder to come by for start-ups in the US and Europe, newly-minted billionaires from the Far East — especially China — are searching the world for value investments. They may just find them in Israel, says Edouard Cukierman, director of the prestigious Tel Aviv investment firm that bears his name. To help Chinese investors find opportunities in Israel, Cukierman will be hosting 20 Chinese billionaires this November at the first Go4China event.

Go4China is based on Cukierman’s successful Go4Europe, which since 1997 has been bringing European investors to Israel. Go4Europe is considered one of Israel’s top investment events; the sponsors include organizations and companies like NYSE Euronext, Medtronic, KPMG, Rusnano (the Russian government’s nanotechnology development company), Novartis, France Telecom, and more. Cukierman acts a sort of matchmaker, bringing investors to meet with Israeli technology companies – and as a law firm, helping to put together deals. Last year, over 1,200 people participated, 400 of them from Europe.

But with the credit crisis in Europe and the weak economy in the US, finding funds — both for start-ups for established companies — has been getting harder. So, Cukierman, and its partner in the effort, the Catalyst Investment Fund, are looking east. Go4China will put Israeli technology, start-ups, and even mid-size companies seeking investments on display for Chinese investors flush with cash, who want better returns than they can get from banks or US Treasury notes.

At least one Chinese company — ChemChina — found that value last fall, when it bought a majority stake in Israel’s Makhteshim-Agan crop protection technology company. Makhteshim-Agan’s sales were up 6.1% in the first quarter of 2012, and with the help of its new Chinese senior partner, the company is set to expand its reach in Asia significantly.

Speaking to journalists last week, Cukierman said that he had carefully chosen the participants in the Go4China event, qualifying them to ensure that they would feel financially comfortable enough to invest in a country they didn’t know much about. Leading the delegation will be Ronnie Chan, one of the biggest real estate developers in pricey Hong Kong.

The objective of the trip, said Cukierman, is to set up an investment fund, along with deals between Israeli and Chinese companies. “Israel has a good reputation in China, and from our experience with previous funds we will be able to set up opportunities for Israeli companies interested in expanding to the Chinese market.”

But not all Israeli start-ups are enamored of the possibility of Chinese investments. Zach Lichtblau, an attorney who works with Israeli companies seeking to set up shop in China, told The Times of Israel that he has gotten numerous inquiries from technology companies who rejected offers by Chinese investors, mostly over concerns that they could end up losing control of their technology.

The concern is legitimate, Lichtblau said, but if handled correctly, Chinese money could prove to be a boon for companies. “China has a poor reputation when it comes to respecting intellectual property, but if a contract is set up properly, it is possible to work with Chinese investors without having to worry about technology theft. It all depends on how the contracts are set up.”

Besides, Lichtblau said, Chinese investors generally prefer to put their money into an investment fund, letting a professional manager handle the technical details.

“Anyone in China who had the kind of money to put into investing in technology companies abroad is by definition a savvy investor, so whatever they put their money into is going to be something they are convinced will pay off for them. They’re more interested in a strategic investment than the specifics of technology,” said Lichtblau. “So any Israeli company that is looking for funding can consider courting Chinese investors without fear — provided they ensure that the contract they sign takes their interests into account.”