Private equity investment in Israel drops in 2Q
Despite fall, investments in Israeli technology companies are growing, with $1.1 billion in 8 deals in same period
Shoshanna Solomon was The Times of Israel's Startups and Business reporter
Private equity investment in Israel dropped 24 percent in the first half of the year, totaling $1.6 billion compared with $2.1 billion in the first half of 2015, an IVC-Shibolet Private Equity Market Survey shows.
The average value of private equity deals in first half of the year was $53 million, up from the $39 million deal-average in the first half of 2015.
For the second quarter of the year, 13 Israeli private equity deals accounted for $1.3 billion, compared with the $1.6 billion invested in deals in the second quarter a year earlier. The average deal amount for the quarter climbed to $98 million, the highest quarterly average in the past four years, IVC said.
The drop in investment is due to trends in the global economy that have made these funds more cautious, the report said.
Even so, the amount of private equity investments into Israeli technology companies is growing, with $1.1 billion invested in the second quarter of the year in eight deals, representing 87% of total private equity investment in Israel and up from 80% in the same quarter a year earlier.
Of the total private equity deals for the quarter, Israeli firms invested in just 19% of the deals, for a sum totaling $184 million, while foreign private equity firms led deal-making in the quarter, the report said.
The Israeli high-tech sector has been producing “more and more mature companies that become potential targets for private equity investors,” said Omer Ben-Zvi, a partner at law firm Shibolet & Co. which co-authored the report with IVC Research Center, a Tel Aviv-based data company that tracks the high-tech industry.
There were two large buyout transactions in the second quarter of the year: Francisco Partners, a long-time player in the Israeli private equity market, bought SintecMedia for $400 million, and newcomer US private equity fund Siris Capital Group LLC made its first investment in Israel through the acquisition of Xura for $643 millon, the report said.
According to the IVC-Online Database, there are 41 Israeli private equity management companies currently active with a total of nearly $10.8 billion under management. To date, five Israeli private equity funds raised capital in 2016, closing $1.7 billion in total, the report said.
