Beresheit is most active fund in 2010
In all of 2010, 51 private equity deals were closed accounting for $1.58 billion, an increase of 210 percent from $513 million (38 deals) in 2009. Apax's buyout of Psagot represented 36 percent of the aggregate deal value in 2010.
In the fourth quarter of 2010, private equity deals valued at over $50 million accounted for 75 percent of total aggregated deal value; deals valued at $20 million to $50 million accounted for 22 percent; and deals valued at under $20 million accounted for the remaining 3 percent. In the third quarter of 2010, deals valued at over $50 million accounted for 63 percent of total aggregated deal value. In the fourth quarter of 2009, all deals were valued at under $50 million.
In 2010, deals valued at over $50 million accounted for 54 percent of total aggregated deal value; deals valued at $20 million to $50 million accounted for 32 percent; and deals valued at under $20 million accounted for the remaining 14 percent. In 2009 only one deal was valued at over $50 million, representing 15 percent of total deal value.
In Q4 2010, the financial sector was the most attractive area for private equity funds, accounting for 77 percent of total deal value. The semiconductors sector followed with 8.5 percent. In the previous quarter, cleantech attracted 41 percent of capital invested, followed by infrastructure with 26 percent, and the retail sector with 15.5 percent. In Q4 2009, the most attractive sector was software with 47 percent of total deal value, followed by the financial sector with 24 percent and life sciences with 15 percent.
In 2010, the financial sector - the most attractive for private equity funds - represented 39 percent of total deal value. The real estate sector followed with 10 percent.
The average deal in the fourth quarter of 2010 was valued at $70 million, compared to $22 million in the previous quarter and $16 million in the fourth quarter of 2009.
In 2010, the average deal value accounted for $31 million, compared to $14 million in 2009.
Israeli Private Equity Deal Types
Seven straight equity deals accounted for $118 million or 15 percent of total deal value in Q4 2010. This compares to $149 million (nine deals) in Q3 2010, and $2 million (two deals) in Q4 2009.
In 2010, 26 straight equity deals were valued at $426 million or 27 percent, compared to 20 deals valued at $229 million or 45 percent in 2009.
One mezzanine financing accounted for $30 million or 4 percent of the aggregate deal value, compared to $50 million (one deal) or 17 percent in the previous quarter, and $30 million (one deal) or 27 percent in Q4 2009.
In 2010, six mezzanine deals attracted $145 million or 9 percent, compared to $67 million (6 deals) or 13 percent in 2009.
No distressed debt deals were reported in Q4 2010, as in previous quarter, compared to two deals of $44 million or 39 percent in Q4 2009.
In 2010, eight distressed debt deals accounted for $139 million or 9 percent, compared to two deals valued at $44 million or 8 percent in 2009.
In 2010, the five largest Israeli private equity deals accounted for 54 percent of aggregate deal value. Apax closed a buyout of Psagot Investment House for $576 million. Tene followed with a buyout of thermostat manufacturer Fishman Thermo for $85 million. Israeli Infrastructure Fund (IIF) had the third largest deal - a buyout of toll highway operator Derech Eretz for $75 million, which was followed by Ergasol's $58 million deal with solar systems installer Inbar Solar. The next largest was FIMI's $50 million mezzanine financing of civil engineering company Tahal.
According to Rick Mann, Managing Partner of GKH, last year saw significant growth in private equity transactions reflecting increased confidence in the Israeli economy. Local Israeli funds continued to account for most of the transactions, but foreign funds are expected to play an active role going forward, particularly in the larger transactions.
Israeli Private Equity Funds Status
Israeli private equity management companies are planning to raise new funds during 2011, remarked Marianna Shapira, Research Manager at IVC. We expect capital raised for private equity investments to reach $1.5 billion, which could boost investment activity and lead to growth in both the number and size of Israeli private equity deals.
This survey reviewed the following typical types of financing deals in the Israeli private equity arena: buyouts, mezzanine, distressed debt, turnaround/ distressed equity and straight equity.
Most Active Private Equity Funds in 2010
Beresheit Fund led the 2010 most active funds ranking with eight first investments. KCPS followed with seven first investments. FIMI had five investments, two of which were first, and the rest follow-ons. Viola shared third place with FIMI, making four first investments and one follow-on.
The real estate and communications sectors attracted the largest number of investments in 2010 - nine and eight deals or 18 and 16 percent of the total number of investments, respectively. The finance and software sectors each followed with 5 deals or 10 percent of the total number of investments.
Eleven private equity deals were closed in Israel in Q4 2010, representing an aggregate deal value of $769 million. This was the highest quarterly total in the two last years, and mainly reflected Apax's buyout of Psagot Investment House for $576 million. The Q4 deal value was 165 percent higher than the $290 million of the previous quarter, when 13 deals were closed, and 590 percent above the $112 million of Q4 2009 (Figure 1) when seven deals were completed.
Three buyout deals were valued at $621 million or 81 percent of the aggregate deal value in Q4 2010, which compares with $76 million or 26 percent in Q3 2010 and $36 million or 32 percent in Q4 2009.
In 2010, 11 buyout deals accounted for $867 million or 55 percent of total deal value, compared to $173 million or 34 percent in 2009.
According to IVC online database Israeli private equity market counts 26 Israeli private equity management companies, which have total managed capital of $7 billion. Included are four Israeli PE funds that were established in the 2009-2010 period.
The ranking reflects the number of deals that encompassed Israeli and Israel-related companies, and also those by Israeli private equity funds that involved foreign companies.