from the March 2012 issue

Blackstone to make major investments in Israel

Private equity fund Blackstone will set up a joint venture with Markstone to invest hundreds of millions of dollars in Israel.

The Blackstone Group LP (NYSE: BX) will reportedly invest hundreds of millions of dollars in Israel, through a joint venture that it will set up with Markstone Capital Partners Group LLC. Markstone, headed by managing directors Ron Lubash and Amir Kess, are expected to become Blackstone's exclusive representative in Israel. Markstone will seek Israeli companies in which the two private equity funds will invest.

The deal will be closed in a few weeks. Markstone has declined to respond to the news. Blackstone, with $166.2 billion in assets under management, is the world's largest private equity fund, larger than Apax Partners, which has invested billions of shekels in Israel, including the acquisition of the controlling interests in Tnuva Food Industries Ltd. and Psagot Investment House Ltd.

CEO Stephen Schwarzman founded new York-based Blackstone in 1985. It has a market cap of $7.66 billion, and posted a net profit of $1.4 billion in 2011.

Markstone has had a mixed track record with its investments in Israel. It founded Prisma Investment House, which went bankrupt. Its investments in Elran (DD) Real Estate Ltd. (TASE:ELRE) and Tomcar Ltd., which developed a commercial off-road utility vehicle, both failed. Successful exits on investments include Golden Pages Ltd., improved seed varieties developer Zeraim Gedera Ltd., and Netafim Ltd.

Markstone raised $800 million in 2003-04 from institutional investors, including California Public Employees' Retirement System (CalPERS) and New York State Pension Fund in the US, Clal Insurance Enterprises Holdings Ltd. (TASE: CLIS) and Menorah Mivtachim Holdings Ltd. (TASE: MORA) in Israel. Markstone chairman Elliot Broidy resigned after a plea bargain for bribery in the US. In September 2010.

Reprinted from the Israel High-Tech & Investment Report March 2012

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