from the September 2014 issue

Private equity investment deals hit 4-year low

Private equity investment in Israel fell to $77 million in the second quarter.

Private equity investors undertook 17 equity deals at an investment of $77 million in the second quarter of 2014 according to the latest IVC Research Center - Gross, Kleinhedler, Hodak, Halevy, Greenberg & Co. (GKH) survey. This was the lowest quarterly amount in four years, 77% down from $339 million invested in 14 deals in the preceding quarter and 90% down from $760 million invested in 19 deals in the corresponding quarter of 2013.

The largest deal in the quarter was a $20 million investment in drug developer BiolineRX Ltd. (Nasdaq: BLRX); TASE:BLRX) by foreign fund Lincoln Park Capital.

GKH Partner and Head of M&A Rick Mann said, "The second quarter figures clearly indicate that private equity funds see few significant opportunities in the Israeli market at this time. The principal exception is the life sciences sector which is also currently experiencing a positive reception in the capital markets. However, investments in Israeli life science companies, while dominant in the second quarter, tended to be relatively small."

Israeli private equity funds invested only $20 million - 26% of all private equity investments in the second quarter of 2014. This was the weakest quarter for Israeli private equity fund investments since 2011. In comparison, $192 million and $128 million were invested by Israeli PE funds in the preceding quarter and corresponding quarter, respectively. IVC Research Center Research Manager Marianna Shapira said, "It appears that private equity funds adopted cautious behavior this past quarter, reflected by low amounts invested per deal, taking smaller-than-usual positions in target companies, and cooperation with venture capital funds and other investors. The proportion of co-investment deals jumped to approximately 70% from a two-year average of roughly 40%, as until recently investors preferred single investment deals. This pattern is unprecedented for Israel's private equity industry."

Reprinted from the Israel High-Tech & Investment Report September 2014

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