Cogito, Peninsula to run government-backed NIS 1 billion growth fund

Shekel money bills (photo credit: REUTERS)
Shekel money bills
(photo credit: REUTERS)
The Economy Ministry’s Small and Medium Businesses Agency selected two funds, Cogito Capital and Peninsula, to manage what is expected to be a NIS 1 billion growth capital fund targeting medium- sized businesses in Israel.
The two companies will receive NIS 100 million each in investment from the Finance Ministry and will be expected to grow that figure to NIS 300m.-NIS 450m.
The two funds, selected from 14 applicants in a tender process, will compete for business from Israeli companies with annual volume transactions ranging from NIS 10m. to NIS 100m.
“Small- and medium-sized businesses are the economy’s growth engine, but on the way there they have to struggle with many hardships, beginning with the ability to raise capital and their personal risk,” Small and Medium Businesses Agency director Ran Kiviti said.
“The fund is intended to provide solutions for the following issues: reducing the risk for investors and inject funds that will enable the business’s development and growth, increased production capacity, exposure to new markets, product branding and a real possibility of competing within Israel and overseas markets,” he added.
More than 80 percent of medium-sized businesses in Israel get their credit from banks, meaning there are few alternative options for raising working capital or purchasing fixed assets. The funds are designed to help bridge that gap by providing some government support but spurring private investment, the model the agency says had been most effective in other OECD countries.
The government will invest up to a quarter of liabilities of the total investment, and take a disproportionate level of risk, while allowing the private investors a disproportionate level of the upside.