Harel launches infrastructure fund

Harel Insurance Investment Ltd. looks to raise $200m. from local and foreign investors

harel insurance 88 (photo credit: )
harel insurance 88
(photo credit: )
Harel Insurance Investment Ltd. hopes to raise up to $200 million for a fund it has launched to invest in national infrastructure projects. Harel said it would provide approximately 20 percent of the funding and that it was looking to raise money from both local and foreign institutional investors, with a minimum investment of $1m. each. Harel has set a $40m. minimum to get the fund off the ground. The fund was established in partnership with STG, a company owned by lawyer Yehuda Raveh, which will play a minor financing role in the project. "We are looking to close the first round of fundraising within the next two months," said Eyal Du Paauw, senior asset manager for private equity and real estate investments at Harel. "There has been great interest from investors both locally and in the US and Europe, so hopefully we will raise the full $200m. in one round." According to De Paauw, the fund would focus on smaller- to medium-sized infrastructure projects where there is a lack of government funding and interest from the banks. "Unlike overseas, infrastructure projects in Israel have generated little interest from private equity firms," he said. "We feel that the traditional equity areas are fully exposed and see infrastructure as a fast growing market, with great opportunity for good returns." Harel already has investments in some of the country's larger infrastructure projects including the development of Route 6, Route 431, and a water desalination plant in Ashkelon. Last year, it bought a 20% stake in the CityPass group, which is currently building the Jerusalem light railway. "Through our involvement and experience in these megaprojects, we believe that we have the knowledge in all aspects of the industry to bring about success in the smaller developments," he added. The fund will be managed by Yaron Kestenbaum who previously worked at the Finance Ministry where he was in charge of managing negotiations with corporate recipients of major government infrastructure contracts. Predominantly involved in Insurance, Harel also has interests in real estate and capital markets. In September, it agreed to buy the asset management unit of Bank Leumi, Leumi Pia, for NIS 535m., becoming the first insurance company to buy into one of the bank's mutual funds. The move came after the Bachar reforms required the banks to sell off their provident and mutual funds, allowing insurance companies to enter the market. Harel is controlled by the Hamburger family, which holds a 49% stake in the company, while Israel Discount Bank has a 20% share. Following the announcement, Harel shares rose 0.6% in Tel Aviv to close at NIS 203.20.