Time to capitalize on the Israeli financial markets
Israel is a very attractive market for raising money for foreign private equity funds, hedge funds and others, such as US real estate companies.
By DANNY AYALONDanny Ayalon(photo credit: Courtesy)
There was a time when Israel was looking for investors to help build its economy. The prevailing joke in the country was “If you want to make a small fortune in Israel, bring a big one.”But today, Israel has become one of the most robust economies in the world, based on its vibrant hi-tech sector, its natural offshore gas fields, a skilled and motivated workforce, and a judicious economic policy. Israel is a magnet for foreign investors, as well as a source of capital for overseas investments.And this is the reason for the establishment of Silver Road Capital, to act as a conduit for the flow of capital into and out of Israel, bringing foreign investors to Israel, as well as facilitating Israeli investment funds overseas.Israel is a very attractive market for raising money for foreign private equity funds, hedge funds and others, such as US real estate companies. These have raised billions in Israeli public debt in recent years at competitive terms.The local institutional investors manage approximately NIS 1.7 trillion. These include pension funds which collect some NIS 5 billion each month. Given the limited size of the local economy and the openness of the global economy, this means potential heavy investments in foreign financial and real assets and other alternative investments.Israel has 65 active limited partnerships (LPs), with nearly 500 investments in private capital funds. Almost 40% of these funds are invested in the US. The growth rate of Israeli-based LPs is more than double the global rate, and 73% of these investors are open to investing in international private equity funds. These institutional LPs are actively investing in solid, fairly conservative private equity but are also interested in direct investments in a diverse array of asset groups such as private debt, real estate and infrastructure.At the same time, there is a constant stream of foreign investment in Israel. Recently, Standard & Poor’s raised Israel’s credit rating from A+ to AA- with an expected continued and sustainable trend of growth that is among the highest in the developed world.In addition, the Decentralization Law, which prohibit conglomerates from holding stakes in both financial and industrial/commercial assets, create very interesting investment opportunities at good prices for private equity from around the world. Consequently, large public companies were forced to sell their multiple subsidiaries.According to Zohar Liss, a partner in the corporate and M&A practice of Fischer Behar Chen Well Orion Israel, as well as facilitating Israeli investment funds overseas.AdvertisementIsrael is a very attractive market for raising money for foreign private equity funds, hedge funds and others, such as US real estate companies. These have raised billions in Israeli public debt in recent years at competitive terms.The local institutional investors manage approximately NIS 1.7 trillion. These include pension funds which collect some NIS 5 billion each month. Given the limited size of the local economy and the openness of the global economy, this means potential heavy investments in foreign financial and real assets and other alternative investments.Israel has 65 active limited partnerships (LPs), with nearly 500 investments in private capital funds. Almost 40% of these funds are invested in the US. The growth rate of Israeli-based LPs is more than double the global rate, and 73% of these investors are open to investing in international private equity funds. These institutional LPs are actively investing in solid, fairly conservative private equity but are also interested in direct investments in a diverse array of asset groups such as private debt, real estate and infrastructure.At the same time, there is a constant stream of foreign investment in Israel. Recently, Standard & Poor’s raised Israel’s credit rating from A+ to AA- with an expected continued and sustainable trend of growth that is among the highest in the developed world.In addition, the Decentralization Law, which prohibit conglomerates from holding stakes in both financial and industrial/commercial assets, create very interesting investment opportunities at good prices for private equity from around the world. Consequently, large public companies were forced to sell their multiple subsidiaries.According to Zohar Liss, a partner in the corporate and M&A practice of Fischer Behar Chen Well Orion & Co. law firm, which represented Bank Leumi in the recent sale of its credit card business to Warburg Pincus for NIS 2.5 billion, this transaction highlights the creative investment opportunities for foreign private equity funds in Israel.Another example of recent overseas investment interest in Israel is Highland Capital, a $15 billion private equity fund from Dallas. The company was introduced to the local investment scene by Silver Road Capital. Highland is showing interest in acquiring Israel’s telecommunications giant Bezeq, which is being sold due to financial difficulties of its parent company. Israel has been known for its successful hi-tech sector. Now it is becoming known as a strong financial force. Under these developments and great conditions in Israel, Silver Road Capital is facilitating the flow of funds in both directions in and out of Israel.The writer, the former Israeli ambassador to the US and deputy foreign minister, is the co-founder and chairman of Silver Road Capital (www.silverroadcapital.com)A sterling enterpriseSilver Road Capital is a boutique investment banking firm, offering 360-degree services for representing high-end American and other foreign investors to Israel, as well as channeling Israeli capital to overseas investments. Silver Road Capital facilitates raising funds (equity & debt). It is also engaged in investment banking in public and private local companies in telecom, IT, retail, fin-tech, ag-tech and more.Silver Road Capital was established by Danny Ayalon and partners Steve Lavin and Lior Maimon. Ayalon served as Israel’s ambassador to the US and Israel’s deputy foreign minister. Lavin, from Chicago, was the chairman of Bank Leumi USA and continues to serve on its board. He is also the vice chairman of OSI, his family-owned company which is one of the largest private food processing companies in the world. Maimon has had a distinguished career in the hi-tech industry in Israel, where he founded a number of companies before moving to the finance sector- Jason Blackshaw
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