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Entrepreneurs

Top private equity companies in Israel

Ronen Menipaz

29.12.2020

As you very well know, there’s a reason why Israel is labeled as the Startup Nation. Private equity (PE) plays a significant part here as for some entrepreneurs, it’s the answer for a business looking to take things to the next level. There may be less glamour and slower growth compared to its VC counterpart, but PE has a firm and more streamlined focus, and has been proven a promising path to success for many startups, time and time again. 

In this post we’ll list the top PEs in Israel, what type of companies they invest in, and their investment agendas. 

But before we dive in, let’s make sure the basics are clear:

What is a private equity company anyway?

As the name suggests, private equity companies are privately owned by founders, groups of investors, or managers and they’re mostly not public/traded on the stock market. They pool money in funds to (typically) buy or invest in companies that are facing certain struggles and have growth potential. In that case, PE steps in to repackage these companies, make them perform better and speed up their growth with the hope to sell them to another company, take them public, or keep them in their portfolio and reap the fruits of their optimized growth.

Maybe the most important fact  to mention is that it’s not just about injecting a serious cash infusion and/or an overhaul of the business. A PE provides ideas and resources, and is actively involved in the business in order to help it succeed. It’s “smart money” at its best.  

Now that we have the facts straight, behold: 

The best private equity companies (listed in alphabetical order) that routinely strengthen Israeli companies and enable them to compete in global markets

Apax Partners

Founded: 1994 (in Israel)
Number of funds: 3 (in Israel)
Portfolio companies: 10 (in Israel)

Apax Partners

Attenti | Global-e | Go Global Travel | Max Psagot | Ramet Trom | Schulz Catering | S.R. Accord | Ten10 | Zap Group

Notable investments and exits: Bezeq (sold to B Communications), Max, Psagot, Ten10, Tnuva Food Industries (sold to Bright Foods), Zap Group.

Unlike most of the entries on this list, Apax Partners is a global partnership that has an established network of local offices. Apax Partners (Israel) Ltd is a subsidiary of a London-based private equity firm Apax Partners Worldwide LLP, investing in Israeli companies via its European funds. With sector-focused investing at its core, Apax Partners has successfully invested throughout all investment stages and even several complete economic cycles due to its long-standing history.

Types of investments: typically invests in large companies across four global sectors: Technology & Telecommunications, Services, Healthcare, and Consumer. Through a deep understanding of these four sectors, the focus is solely set on long-term investments in growth companies. The average length of an investment by Apax Funds is around five years. 

Type of investor: generally focuses on growing businesses by acting as a catalyst for change through established processes. Public and private pension funds, as well as fund of funds and sovereign wealth funds constitute more than 70% of AP inventors. 

Catalyst Investments

Founded: 1999
Number of funds: 3
Portfolio companies: 8

Catalyst Investments

Arbe | Dori Media | Lamina Technologies | Lutris Pharma | SatixFy | Raziel Therapeutics | Taboola | XJet

Notable investments and exits: Dori Media, Mobileye (IPO), Omrix Biopharmaceuticals (IPO), PowerDsine, Taboola, Tufin (IPO)

In 1999, Catalyst started out as a venture capital fund focused on maturing Israeli technology investments, gradually shifting to growth-stage investment opportunities. Today, Catalyst’s focus is on the long-term growth of mature Israeli and Israeli-related innovative companies, identifying opportunities for strategic guidance and business expansion besides the capital injection. It’s worth noting that Catalyst has extensive experience and know-how of the Israeli tech ecosystem, as well as an international network (most notably in Asia, America, and Europe) that can help with the development of global activities. 

Types of investments: late stage with a broad sector focus; covering disruptors across numerous industry sub-sectors with applications in global markets, and at different stages of the life cycle.

Type of investor: long-term investors in disruptive tech companies who are focused on long-term growth and international expansion. Catalyst also provides additional value through a network of global investors and transactional experience in global capital markets and cross-border M&A.

FIMI Opportunity Funds

Founded: 1996
Number of funds: 7
Portfolio companies: 33

FIMI Opportunity Funds

Amiad Water Systems | Bet Shemesh Engines | Bird Aerosystems | Delek-San | DIMAR | Formula Systems | G1 | Galam | Gilat | Hadera Paper | Ham-Let | Inrom | ISI | Kamada | Magal | Mer Group | Nirlat | Novolog | Orbit | Ormat Technologies | Overseas Commerce | Oxygen and Argon Works PCB Technologies | Polyram Group | Rekah | Simplivia | S.O.S | Stern Engineering | Tadiran | Tadir-Gan Group | TAT Technologies | Unitronics | Urdan

Notable investments and exits: Retalix (sold to NCR Corporation), Lipman Engineering (sold to Verifone Systems), Solbar (sold to CHS Inc.), Ophir Optronics (sold to Newport Corporation), Ormat Technologies, Rivulis (sold to Temasek), TAT Technologies.

FIMI is often regarded as one of the top funds worldwide when it comes to long-term returns for investors. Its focus is mainly on mature companies with talented, motivated leadership where FIMI’s capital, strategic insight, operational support and global relationships will help the business grow.

Types of investments: covers a wide range of sectors: automotive, electronic components, metals, software, aviation, plastics, building materials, communications, water filtration, pharmaceuticals, alternative and solar energy, warehousing, and logistics. The company doesn’t shy away from investing in global companies that have a significant footprint or are leaders in the Israeli market.

Type of investor: invested in over 90 companies to date, FIMI usually targets mature Israeli companies that have significant revenue (an annual turnover of at least $75 million) along with strong growth prospects that can be improved by the company’s active management.

Fortissimo Capital

Founded: 2004
Number of funds: 6
Portfolio companies: 26

Fortissimo Capital

4RF Afimilk | Animated Storyboards | Atlas Dynamics | Beewise | Cardo Systems | Cellopark | Enercon | Equi-nom | Gadot Biochemical | GigaSpaces | IncrediBuild | MGAR | MotoRad | One Hour Translation | Origene Seeds | Phoenicia | Polytex Technologies | Priority Software | Salt of the Earth | Sanquin Plasma | Solcon | Solynta | Sugat | Synergy Cables | Tritone Technologies | Tuttnauer

Notable investments and exits: MGAR, Kornit Digital IPO, SodaStream IPO, sale of Diptech to Ferro, sale of Nur Macroprinters to Hewlett Packard, sale of Cadent Inc. to Align Inc., sale of Starhome to Telerix. 

Fortissimo invests mainly in Israeli (or Israeli-related) public and private tech and industrial companies. The firm invests in companies at various phases, including growth acceleration, special situations, turnarounds, and at points of inflection, where strategic guidance along with the necessary capital will pave the road to success.

Types of investments: typically invests in companies with the following characteristics: leading and/or viable technology implemented in existing products with proven sales; consistent revenue stream and a pipeline from top-tier customers; high growth market; clear potential to gain a leading market share; and an experienced management team.

Type of investor: long-term investors seeking to partner with management to shape corporate strategy and implement a plan of execution to accelerate growth and maximize shareholder value. These mostly include leading financial institutions such as insurance companies, banks, and pension funds.

GlenRock Israel  

Founded: 2003
Number of funds: 1
Portfolio companies: 39

GlenRock Israel

270 Surgical | Aquarius | Autotalks | BrainsGate | CardioValve | Capitalise | Cellium | Centralway Numbrs | Cipia | CyberObserver | Cylus | EarlySense | Ecoppia | Etoro | Evogene | Guardian Optical Technologies | Idomoo | IMC | Kamada | Karamba Security | Lydus | Magnus Metal | Model9 | MyHomeDoc | Nurami Medical | Outbrain | Quantum Machines | Photomyne | PortoCana | PvNanoCell | Rainbow Medical Innovation | Sana Life Science | Shellcase | SMART Medical | StoreDot | Vascular Biogenics | Worthy | Xinteza

Notable investments and exits: CyberX (acquired by Microsoft), Mobileye (acquired by Intel), Outbrain, Quantum Machines, Visionsense (acquired by Medtronic), Valtech Cardio (acquired by Edwards Lifesciences)

A single family office, GlenRock Israel has plenty of experience when it comes to identifying llife sciences and advanced technology opportunities which are at the center of its investment strategy. The firm also offers value-added services such as advisory, M&A services, and financial services to its portfolio companies..

Types of investments: three main areas of activity: life sciences (life extension and quality of life improvement opportunities, including medical cannabis and digital health), autotech, cyber and other advanced technology – at all stages of commercialization. For its tech-centered investments, startups should meet the following criteria: experienced management, unique tech with verified market needs, sound business models, proof-of-concept, and initial sales.

Type of investor: taking an active and long-term role in the development and growth of portfolio companies, either solely or together with investment partners. Thanks to its global reach and presence, GlenRock can also assist portfolio companies in reaching international markets.

Israel Growth Partners 

Founded: 2014
Number of funds: 2
Portfolio companies: 15

Cellebrite | Earnix | GreenRoad | Hibob | Jacada | LiveU | McMakler | Optimove | Pipl | SysAid | Valens | Zadara

Notable investments and exits: Cellebrite, Hibob, Optimove, Panaya (sold to Infosys), R2Net (sold to Franciso Partners), SysAid, Valens.

Israel Growth Partners (IGP) aims to help Israeli-related hi-tech companies at growth phase go global and become market leaders. Besides growth capital, IGP provides strategic guidance and hands-on experience thanks to its in-house expertise.

Types of investments: as the company points out, two main investment criteria are quality and partnership for investing in Israeli-related technology companies. Companies must have revenue larger than $10M, though, along with strong product differentiation and some form of technological advantage.

Type of investor: as late stage investors, IGP primarily partners with established growth companies and is in it for the long run. 

Kedma Capital

Founded: 2006
Number of funds: 6
Portfolio companies: 12

Kedma Capital

ACE | Brand Industries | Carmel Winery | Continuity Software | Danel | FIS | Gil-Car | Iskoor | Marina | QualiTest | S.AL Group

Notable investments and exits: ACE, Continuity Software, Femi Premium (sold to G Square Capital), QualiTest Group

Previously known as KCPS Private Equity, Kedma Capital  invests in Israeli and Israel-related companies across different sectors. Its primary focus is on late-stage investments, priding itself in its ability to realize the untapped value of its portfolio by penetrating new markets, carrying out acquisitions, and restructuring capital.

Types of investments: services, industry, industrial agriculture, information technology, advanced technologies, logistics and retail. Investment criteria includes annual revenues of over 100 million ILS, a positive EBITDA (earnings before interest, taxes, depreciation, and amortization), and a positive cash flow. Typically buys 50% or more of the company in question.

Type of investor: primarily takes control or joint-control positions in small to mid-sized companies in leveraged transactions. Kedma Capital can also invest in larger deals in partnership with co-investors. 

M51 Entrepreneur Labs

Founded: 2015
Number of funds: 1
Portfolio companies: 7

M51 Entrepreneur Labs

Cerebro | HAVEN | Legacy Capital | Meme Global | OVIVO Games |

Notable investments and exits: Meme Video, OVIVO Games GWM, Playtium

A relative newcomer to the Israeli PE scene, M51 has a somewhat different approach to investing than the everyday PE. The company primarily invests in people, accentuating passion, creativity, and fearlessness as key traits it’s looking for in an entrepreneur. 

It also helps its portfolio companies realize their full potential by investing its time, brain cells, and network of resources in various fields: developing, marketing, data science, networking and collaborations, finance and cash flow management, banking, recruitment, design, and capital investment.

Types of investments: tech-oriented investments primarily in the fields of gaming, financial technologies, real-estate, marketing technologies and education, ranging from $100.000 to $1 million.

Type of investor: mostly in early-stage companies with a clear business model or vision; works hand-in-hand with portfolio companies to help them exceed their limits and overcome any challenge. 

Shavit Capital Fund 

Founded: 2008
Number of funds: 5
Portfolio companies: 15

Shavit Capital Fund

Alpha TAU Medical | Anchiano Therapeutics | Ayala Pharmaceuticals | Brainsway | Gamida Cell | Intec Pharma | Kamada | Mapi Pharma | Polus Tech | PolyPid | ReWalk Robotics | Syqe Medical | Trax

Notable investments and exits: Alpha TAU Medical, Elbit Vision Systems (acquired by Uster Technologies),  Foamix (merged with Menlo Therapeutics), SuperDerivatives (sold to Intercontinental Exchange Group), Trax

Shavit Capital is an investment firm that specializes in late-stage investments in Israeli and Israeli-related tech companies with strong management teams and across all sectors. 

Types of investments: the primary focus is on technology-based companies. Shavit Capital invests directly up to $15 million per transaction and leads investment rounds of up to $60 million. The firm invests in equity mezzanine or bridge rounds in companies which expect to raise larger amounts via an IPO, dual listing, and through PIPEs (Private Investment in Public Equities) of Israeli publicly-traded companies.

Type of investor: invests in other late-stage opportunities and provides support in pursuit of IPO plans. Minimal intervention with existing management teams, does not request a seat on the Board of Directors or veto rights in terms of decision making processes.

Tene Investment Funds

Founded: 2004
Number of funds: 4
Portfolio companies: 19

Chromagen | Field Produce Ltd | Gadot | Gadot Agro | Habonim | Hamadia Doors | Huliot | Noga | Omen Die Casting | Ortal | Qnergy | Ricor Vacuum & Cryogenic Systems | Scodix | Sharon Laboratories | T.A.G. Medical Products | TELDOR Cables & Systems Ltd | Telefire | TIBA Parking Systems | Traffilog

Notable investments and exits: Caesarstone (IPO), Gadot Chemical Terminals, Netafilm (sold to Permira), Qnergy, SCR (sold to Allflex), TIBA Parking Systems (sold to FAAC), Traffilog.

Tene is one of the most respected names in Israel’s financial community and private equity scene, with strong investment and operational experience. The firm primarily targets established growth companies with leading global market positions.

Types of investments: export oriented industrial sectors such as agriculture technologies, resource management, clean technologies, consumer products, construction and homeland security, and so on. This pertains to well-established companies with strong existing markets and significant growth potential, as well as a talented management team and some form of competitive advantage (technological, product, or market).

Type of investor: Tene refers to its investing approach as fundamental investing, focusing on high growth, profitable, global companies with a strong cash flow and pre-defined exit strategy; prefers to have an active role in supporting portfolio companies.

There you have it – a selection of finest PE companies in Israel. I’m routinely monitoring the developments in the scene and I’ll be adding a new company to the list every month or two. So, check back for updates and as usual, leave suggestions on LinkedIn.

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