In Q2/2015, Israeli private equity performance reached a quarterly record, with 29 deals amounting to $1.67 billion in capital, according to a report by IVC Research Center and Shibolet & Co. The quarter ended with the largest number of Israeli PE deals in comparison to the 5-year quarterly average of 17 deals. The quarterly amount invested in PE deals was the highest in three years, far above the $145 million and the $385 million invested in Q2/2014 and Q1/2015, respectively.
In H1/2015, 44 PE deals totaled $2.1 billion – the strongest first half-year since 2011, quadrupling H1/2014’s $592 million invested in 44 deals. The average private equity deal reached $46.8 million in H1/2015, compared to $13.5 in H1/2014.
In H1/2015, Israeli private equity fund investments accounted for $447 million, or 22 percent, of total investments. This compares with $355 million (60 percent) invested in H1/2014 and $208 million (23 percent) in H1/2013. The largest deal by an Israel PE fund was the $97 million buyout of paper manufacturer Hadera Paper by FIMI in Q2/2015.
The bulk of PE investments were made by foreign PE funds, which have dramatically increased their activity in Israel in Q2/2015 with $1.3 billion, capturing 78 percent of all investments. The amount was only marginally lower than the $1.4 billion (83 percent of total) invested in Q3/2014 – the strongest quarter for foreign PE fund activity to date. Moreover, in H1/2015 foreign PE fund investments accounted for 77 percent of all investments, compared to H1/2014, when they captured just 37 percent.
Foreign PE funds were responsible for the top four deals in 2015, exceeding $100 million each, together amounting to nearly $1.3 billion, or 62 percent, of total PE transactions in H1/2015. The buyout of Lumenis, a medical device company by XIO Group, a Chinese PE fund, amounted to $510 million, 30 percent of total PE deals in Q2/2015. The buyout of ClickSoftware, an enterprise software company by Francisco Partners, a global private equity firm, followed closely, with $438 million. Two additional straight equity deals were under $200 million each: $175 million investment in Ormat by Northleaf, and $150 million invested in Infinidat by TPG Growth.
In Q2/2015, 11 buyout transactions led all Israeli private equity deal-making with $1.3 billion, or 80 percent, of total investments. In comparison, straight equity deals dominated both in Q1/2015 and Q2/2014, with 89 percent and 59 percent of total dollar investments, respectively.
Software led all private equity transactions both in H1/2015 and H1/2014, with 33 percent and 23 percent of total dollar investments; life sciences stood out in H1/2015 with 28 percent, compared to just 9 percent in the same period of 2014. In terms of the number of PE deals, the services industry had an unusual number of deals: 11, mostly due to the new Israeli private equity fund active in the television field.