Private-equity deals nearly doubled in the third quarter, led by investment into the clean-tech and infrastructure sectors, the Israel Venture Capital (IVC) Research Center reported Monday in its quarterly survey.
“This year has seen strong investment activity among Israeli private-equity firms,” Rick Mann, managing partner of Gross, Kleinhendler, Hodak, Halevy, Greenberg & Co., a law firm that specializes in mergers and venture capital and who conducted the survey in cooperation with the IVC Research Center, said in the report. “We are now seeing indications that foreign private-equity funds are once again actively considering private- equity investments in Israel. Historically, foreign funds consider relatively large investments, so that may lead to growth in deal size in the coming quarters.”
Eight private-equity deals were closed in Israel in the third quarter, worth an aggregate $277 million. That was 90 percent more than the second quarter, when eight private-equity deals worth a total of $146m. were closed, and up 54% from the $180m. for the 13 private-equity deals in the third quarter last year.
The survey reviews deals involving Israeli and foreign private-equity funds. It examined 33 private- equity funds: 14 Israeli and 19 foreign.
“Currently, there are 27 active Israeli private equity funds, with total managed capital standing at $6 billion in 2010,” said Marianna Shapira, research manager at IVC Research Center.
“Three new Israeli private-equity funds were established both in 2010 and in 2009. Among the active funds, eight are fully invested but continue to manage their portfolio companies.
“There are five typical types of financing in the Israeli private equity arena: buyouts, mezzanine, distressed debt, turnaround/distressed equity and straight equity reviewed in this survey.”
Clean-tech was the most attractive sector for private-equity funds in the third quarter, with 43% of total deal value. The infrastructure sector was next (27%), followed by the retail sector (16%).
In the second quarter, real estate attracted 56% of capital invested, followed by semiconductors (24%) and the retail sector (9%).
In the third quarter last year, the most attractive sector was real estate (25%), followed by industrial technologies (19%) and life sciences (17%).
In the third quarter of 2010, the average deal value was $35m., compared with $18m. in the second quarter and $14m. in the third quarter of last year.
Private-equity deals valued at over $50m. accounted for 66% of the aggregate deal value; deals valued at $20m. to $50m. accounted for 16%; and deals valued at under $20m. accounted for 18%. In the second quarter of 2010 and the third quarter of 2009 all deals were valued at under $50m. each.
In the first three quarters of 2010, the five largest Israeli private-equity deals accounted for 40% of aggregate deal value.
Tene Investment Funds bought thermostat manufacturer Fishman Thermo for $85m. Israeli Infrastructure Fund (IIF) bought highway toll operator Derech Eretz for $75m. Ergasol bought solar-systems installer Inbar Solar for $58m. FIMI closed a $50m. mezzanine financing with civil engineering company Tahal. Beresheit and KCPS completed a $48m. buyout of Mishkenot Clal, an operator of residential centers.
