Private equity deals worth $192M in Q1
First quarter of 2013 is second lowest for private equity transactions in three years, with 72% decrease from $687 million invested in fourth quarter of 2012. Cleantech sector stands out, capturing 63% of investments
The first-quarter amount, however, is twice the $96 million attracted by eight companies in the same quarter in 2012.
Better Place's straight equity deal captured 52% of total quarterly deal value, as $100 million was invested by Israeli and foreign institutional and corporate investors. The average deal in the first quarter of 2013 was valued at $32 million, compared to $86 million and $12 million in the fourth quarter of 2012 and first quarter of 2012, respectively.
Israeli PE funds invested $67 million – 35% of total investments — in the first quarter of 2013. In the fourth quarter of 2012 and first quarter of 2012, Israeli PE funds accounted for 36% and 44% of investments, respectively.
FIMI made the largest private equity deal among Israeli funds with its $30 million buyout of Overseas Commerce, a logistics services company. The transaction accounted for 45% of all PE activity by Israeli funds in the quarter.
According to Rick Mann, partner and head of M&A at GKH, "First-quarter results are disappointing and show reduced private equity activity in Israel, particularly if you neutralize the Better Place investments which were not classic private equity investments.
"This is consistent with a global decrease in merger and acquisition activity in the quarter, and seems to reflect a general sense of caution in the market. We do not see any indication that the fundamental attractiveness of the Israeli market for private equity investors has declined."
Private equity deals by sector
The cleantech sector led investments in the first quarter of 2013 for the third time in three years, capturing 63% of deal value. In comparison, the sector accounted for just 12% of deal value in the fourth quarter of 2012, while in the first quarter of 2012 no cleantech investments were made.
Services transactions followed with 16%, and retail sector investments attracted 13%.
Private equity deals by type
Two straight equity deals attracted $107 million in the first quarter of 2013, 56% of total transaction value. The largest straight equity transaction was the $100 million investment in Better Place.
In comparison, straight equity deals accounted for 12 and 32% of deal value in the fourth quarter of 2012 and first quarter of 2012, respectively. Two buyout deals followed with $55 million or 29% of total deal value, and two mezzanine investments accounted for the remaining 15%.
Israeli private equity funds
The IVC-Online Database maintains data on 25 active Israeli private equity management companies with a total of $7.9 billion under management. One Israeli private equity fund raised $230 million in 2013.
According to Marianna Shapira, research manager at IVC, "The first quarter saw the smallest number of deals in three years. However, it is doubtful that PE investors have lost their appetite for Israeli firms.
"Israeli PE funds raised twice as much capital in 2012 as they did in 2011, and capital raising is underway in 2013. These facts lead us to expect more PE activity as the year unfolds in an industry that has demonstrated considerable volatility."
