PE funds invested $3.5b in Israel deals in 2016
Foreign and local private equity firms put in a record amount of money in 2016, but the number of deals was lower
Shoshanna Solomon was The Times of Israel's Startups and Business reporter
Israeli and foreign private equity funds invested $3.5 billion in 68 local deals in 2016, up 14 percent from 2015 and the highest amount ever invested by private equity entities, according to a new survey by IVC Research Center and attorneys Shibolet & Co.
The number of deals, however, dropped 17% percent in 2016, down from 103 deals in 2015 and 17% below the five-year average of 82 private equity transactions, the survey revealed. Private equity firms invested $3.1 billion in Israeli deals in 2015 and $2.73 billion in 2014.
The four largest deals closed in 2016 were all buyouts above $100 million each, accounting for $2.54 billion, or 72 percent of total capital proceeds.
The buyout of Keter Plastic Ltd. by BC Partners, a private equity firm, for $1.4 billion — the largest Israeli private equity deal recorded in five years — was followed by the $643 million buyout of Xura, a provider of digital communications services, by affiliates of Siris Capital Group LLC. In third place was the $400 million buyout of SintecMedia, a developer of software for media brands, by Francisco Partners. Israeli PE fund FIMI Opportunity Funds carried out a $100 million buyout of G4S Israel, a security services company.
The high value of the private equity deals is “encouraging,” and even if there was a “substantial decline” in their number in 2016, it is too early to declare the beginning of a slowdown in the Israeli private equity industry, said Omer Ben-Zvi, a partner at Shibolet & Co. in a statement. The drop in the number of deals is in line with a decline in the US private equity market, he said.
Activity by Israeli private equity funds decreased in 2016, with 30 funds investing $630 million, 18% of total capital proceeds — the lowest share for Israeli PE fund investments in the past five years. This compared with the record $1.06 billion (34% of total) invested by 36 Israeli PE funds in 2015. The number of transactions was also down, with 38 deals, compared to the five-year average of 53 transactions.
Foreign PE fund investments retained last year’s average activity levels, with 33 transactions in 2016, despite the fact that the number of funds investing in 2016 dropped 26 percent — from 43 actively involved foreign PE funds in 2015 to only 32 funds in 2016. In terms of capital invested, however, foreign private equity investments rose to $2.9 billion in 2016, up from $2.03 billion invested in 2015. Three buyouts were responsible for this record amount, capturing 85 percent of total foreign private equity investments in 2016 — those of Keter Plastic, Xura and Sintec Media.
Currently, there are 39 active Israeli private equity management companies monitored by IVC Research Center, with a total of $12.12 billion under management and an estimated $1.2 billion available for new investments. In 2016, four Israeli private equity funds raised $1.3 billion in total, the statement said.
Technology deals kept a strong momentum in PE deals, with 44 transactions performed in 2016, the same as the five-year average, accounting for 65% of the number of deals, and generating $1.61 billion, or 46%, of total capital volume.
