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Israeli PE, VC deal value soars in first quarter thanks to surge in big deals

13 May 2014

israel_flarground_170sqThe amount of capital private equity firms invested in Israel in the first quarter of 2014 was up more than 50 per cent compared to the previous three months, new research has shown.

Although the 12 deals was just under the quarterly average of 13 from 2012 and 2013, firms invested $349m in the quarter according to the survey by IVC sponsored by Gross, Kleinhandler, Hodak, Halevy, Greenberg & Co (GKH).

That was up significantly on the $231m from the last quarter of 2013 and a huge increase on the $145m invested across 14 deals in the same period last year.

The largest transaction in the quarter was a $115m buyout of NSO, a software security company, by US firm Francisco Partners.

That deal accounted for 33 per cent of total quarterly deal value. Two additional deals exceeded $50m each and accounted for 38 per cent of total private equity deal value.

Marianna Shapira, Research Manager at IVC Research Center said, “In the first quarter of 2014 we saw the comeback of private equity deals in technology industries, which accounted for 62 per cent of total PE deal value.

“While in 2013 both Israeli and foreign investors focused on traditional industry, that year diverged from the norm. In the two previous years – 2011 and 2012 – the majority of private equity activity was in technology fields, reaching 75 percent and 85 percent, respectively.

“An emphasis on PE transactions in high-technology fields will most likely continue in 2014.”

Israeli private equity funds accelerated their activity in the first quarter, investing $202m or 58 percent of all private equity investments.

That amount is 21 per cent below the $257m three-year average, but almost three times the $68m invested in the last quarter of 2013.

The largest deal was Tene Investment Fund’s acquisition of Gadot, a chemical transport, storage and distribution company, for $73m.

GKH partner and head of M&A Rick Mann said, “The Israeli M&A market continues to show signs of strength, and we have seen increased competition between private equity players and strategic acquirers. Hesitation by local banks in offering acquisition financing may be making it more difficult for those potential acquirers seeking to leverage their transactions.

“Israeli PE funds continue to be a strong force in the market, and we may see more PE funds targeting the local market.”

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