The FIMI 6 Fund is the largest ever raised in Israel.
"We began raising the fund six months ago, and the truth is that after two or three months, we already stopped meeting new investors," FIMI Opportunity Funds founder and CEO Ishay Davidi said today, announcing the completion of a $1.1 billion financing round for its sixth fund - the largest fund ever raised in Israel. Demand exceeded $2 billion, and the fund raised the maximum amount it set for itself.
"There is no doubt that this rapid and high-speed fund raising shows that the investors believe that FIMI's model and format are suitable for them," Davidi commented. He added that the investors were evenly divided between Israelis and foreigners. The investors included investment institutions, private investors, international companies and universities, and managers of the fund itself, who invested $40 million in it. The largest investments were in the $70-110 million range. "There were even investors who wanted to invest $250 million," Davidi said.
Davidi: "We don't get into that. FIMI is celebrating its 20th anniversary this year. During those years, in addition to economic crises, we have also experienced the intifada and other events that were not trivial affairs. Even in those period, we raised money for investments in Israel - not because somebody particularly likes Israel, but because of belief in FIMI's model and business. Our basic approach is to look at things through a business prism. We want to make the best industry and companies possible in Israel. Somebody who invests in FIMI isn't interested in this, and if they did, we probably wouldn't begin a dialogue with him. Investors are obviously hearing about the terrible knifings and ask questions, but that comes from a perspective of whether Israel is a risky place to invest in. That's a legitimate question, and in our opinion, although we're not objective, Israel is an excellent place to invest in."
FIMI is Israel's largest investment fund, and certainly the most active and successful one. With a current equity of $3.2 billion, the fund acquires a controlling interest in companies and upgrades them. To date, FIMI has acquired control of 80 companies and has sold 51; the aggregate value of its deals exceeds $4 billion. Its portfolio companies include Ormat Technologies Inc. (NYSE: ORA; TASE: ORMT), Ham-Let (Israel-Canada) Ltd. (TASE: HAML), Gilat Satellite Networks Ltd. (Nasdaq: GILT; TASE: GILT), Rivulis Irrigation, etc. The fund has been rated one the five best funds in the world every year in the past decade, which made it easier to complete its fund successfully and quickly (globally, it takes private equity funds an average of 20 months to complete a fund).
The FIMI 6 fund will continue the same strategy of the previous funds, and plans to invest $250 million a year in 4-5 Israeli companies.
"People like to do business with FIMI, and the deal flow looks very interesting," Davidi says. He believes that the number of companies acquired and sold will be similar. "As a basis, FIMI's strategy is to acquire control of Israeli companies with sales of $75 million or more. We're looking for growth engines in them, or finding growth engines for them. The requirement is that we're able to give them added value.
"In the coming years, I think we'll acquire controlling interests in more companies; we'll try to reach a maximum holding in each company. We spend a lot of time and effort on each company, so it's best to get a maximum. They don't always sell it to us: in Hadera Paper Ltd. (TASE: AIP; Pink Sheets: HAIPF), for example, we have a 60% stake, but had the public sold us the remaining 40% at a price we were willing to pay, without paying a premium on ourselves, we would have bought."
Davidi adds, "Compared with most of the world's private equity funds, FIMI is very unleveraged. The average leverage ratio is 50-70%, while FIMI's is 10-15%. The investors see and understand this. This model enables us to do a better job of getting through crises, and when other go on the defensive, we're able to buy companies, because we're financially stable."