Private equity investment in Israeli firms surges to record

$3.26 billion invested in the first 9 months of 2016, more than the $3.22 billion invested in all of 2015

Shoshanna Solomon is The Times of Israel's Startups and Business reporter

Illustrative photo of Israeli shekels. (Sophie Gordon/Flash90)
Illustrative photo of Israeli shekels. (Sophie Gordon/Flash90)

Private equity investments in Israel totaled a record $3.26 billion in the first nine months of the year, topping the $3.22 billion invested by private equity firms in Israeli firms for the whole of 2015, a joint report by IVC Research Center, which tracks the industry, and Shibolet & Co. law firm shows.

In the third quarter of 2016, private equity deals in Israel rose to $1.7 billion in 18 deals, the highest quarterly amount in the past two years. The amount was over four times the $358 million in the third quarter of 2015, and 32 percent above the previous quarter.

The acquisition of Israel’s Keter Plastic, a manufacturer of household and garden plastic products, by BC Partners in July for $4.1 billion, accounted for 43 percent of private equity investment in the first three quarters of the year, the IVC-Shibolet Private Equity Survey said. And while Israeli private equity funds decreased their activity by 29 percent for the nine-month period, year on year, foreign private equity funds actually led deal-making in Israel, both in the third quarter and in the first nine months of the year, investing $2.8 billion in 27 transactions for the nine-month period.

Technology transactions saw a decline in the first nine months of the year, with 38 deals that totaled $1.5 billion or 47 percent of total capital volume, as compared with $1.8 billion — 76 percent of the total — invested in 40 transactions in the same period in 2015, the report said.

“We are experiencing an annual volume increase even before year-end. This figure is highly influenced by single oversized deals, like the Keter buyout, but this is always the case in private equity markets – there are always few very large deals alongside much smaller ones,” Omer Ben-Zvi, partner at Shibolet & Co., said in the statement. “Rather than a one-off deal, we regard the Keter transaction as a credibility reaffirmation of the local market by the international PE industry.”

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