Following the recent AOL acquisition of Israeli-formed start-up Adap.tv, which was backed by several venture capital firms including Israel-based Gemini Israel Ventures, the private equity fundraising conditions in Israel appear to be progressing in line with the Israeli high-tech boom of the past decade. According to Preqin’s Fund Managers Profiles, there are currently 80 private equity fund managers based in Israel, which have raised around $9bn in aggregate capital over the past 10 years and have an estimated $2bn in total available dry powder. Prominent Israel-based firms that have historically raised the highest amounts of capital are FIMI, Markstone Capital Group, Pitango Venture Capital, Carmel Ventures, and Fortissimo Capital.
With regards to current funds in market, there are 20 private equity vehicles that include Israel as part of their geographical investment strategy, actively seeking to raise a target of $3bn in total capital, with an average target size of $150mn. There is dynamic interest in Israeli start-ups, as demonstrated by the fact that 75% of all funds in market with objectives in Israel are pursuing a venture capital strategy. The top three exclusively Israel-focused funds currently raising capital in terms of target size, are Pitango Venture Capital Fund VI, Carmel Ventures IV and Viola Credit V, which are seeking to raise $250mn, $200mn and $200mn respectively.
In the past 12 months, 20 private equity funds that include a geographical focus on Israel have held a final close, raising just under $5bn in aggregate capital, with 10 of these funds being solely focused on Israel. The industry focus of these funds is generally diversified, with the most frequently targeted sectors being IT, technology, internet, and software. The largest fund to close in the last 12 months was FIMI Opportunity Fund V, an exclusively Israel-focused buyout fund that reached a final close size of $820mn.
An overview of the past five years’ levels of capital garnered by private equity funds with an interest in Israel reveals that there was a decline in amount of aggregate capital being raised from 2007-2009, but this figure increases in the period 2010-2012. Preqin data shows that aggregate capital secured by these funds was approximately $7bn in 2007, dropping to $5bn in 2008, then to $4bn in 2009 and less than $1bn in 2010, but then scaled up to $3bn in 2011, and $5bn in 2012.