Fortissimo is on its way to another deal with Blackstone. Calcalist has learned that the Israeli investment fund is in talks to acquire part of the operations of RGIS, short for Retail Grocery Inventory Services, one of the world’s largest inventory counting service companies, which is controlled by U.S. firm Blackstone, the world’s largest alternative asset manager.
Fortissimo is in talks to acquire control of a company that holds RGIS operations in Israel and several other countries. The talks are being conducted at a valuation of about $400 million for the company in which Fortissimo is seeking to buy a controlling stake.
Yuval Cohen, manager of the Fortissimo Fund, and Yafat Oron, CEO of Blackstone Israel
(Photos: Amit Shaal, Omer Hacohen)
RGIS currently operates in Israel through ISIC-RGIS, which provides inventory counting services to retail chains, food companies, importers, fashion chains, pharmacies, hospitals and industrial plants.
RGIS was founded in 1958 in Michigan by Thomas Nicholson to provide inventory counting services to grocery and retail chains. Over the years, it expanded to dozens of countries, developing dedicated scanning systems and handheld terminals that allow inventory counts to be conducted and the data transferred directly to customers’ information systems. Its operations have long relied on thousands of employees who perform inventory counts in stores, warehouses and logistics centers.
A world leader in the field
In 2006, Blackstone acquired control of RGIS from the founding family in a deal that was estimated to reflect a company valuation of about $1.5 billion. Under Blackstone’s ownership, the company expanded to more than 60 countries and became a global leader in the field. At the same time, it broadened its services to include logistics centers, manufacturing plants and health care organizations.
Blackstone has held RGIS for nearly 20 years, an unusually long period in private equity terms, where the typical holding period for assets is usually 10 to 12 years, depending on the industry’s standard fund life. In recent years, Blackstone has gradually begun realizing its investment by selling parts of the company, partly because RGIS has faced eroding profitability in North America amid high labor costs and growing competition, leading to a restructuring process.
Splitting the company into shares
The restructuring included a 2021 deal in which RGIS sold its North American operations, in the United States and Canada, to competitor WIS International. The amount of the deal was not disclosed, but market estimates put it at hundreds of millions of dollars.
At the same time, RGIS International, the company’s international arm, completed the acquisition of 95% of Europe’s Ivalis Group, which provides inventory counting and logistics consulting services in France, Germany, Italy, Spain and other countries. At the time, Ivalis had annual revenue of about 73 million euros. The terms of that deal were also not disclosed.
Today, after the split, RGIS focuses on operations outside North America, mainly in Europe, the Asia-Pacific region and Mediterranean countries. In some countries, it operates through subsidiaries, while in others it works through local franchisees. The company also holds the intellectual property, information systems and technologies used to manage and conduct inventory counts.
ISIC-RGIS is based in Rishon Lezion and operates across the country. The company provides inventory counting services to retail chains, food importers, fashion chains, home goods stores and supermarkets. It also provides services to pharmacies, hospitals, industrial plants and logistics centers, as well as shelf arrangement and inventory loss reduction services. All shares of the Israeli company are held by the international company. Its directors are Asaf Cohen and Heinz Krause.
According to the Israeli company’s website, global RGIS currently operates in 66 countries, serves about 3,500 clients and conducts about 1,150 inventory counts each day. The company says it has completed more than 230,000 inventory counting projects to date. Its offices are located in Canada, Mexico, Brazil and Israel, and it is also active in many countries in Europe, the Middle East and Asia. The company emphasizes its investments in inventory management technologies, including cloud-based solutions and voice counting systems.
In a class action lawsuit filed against the company about a decade ago, its operations were described as relying on many workers who perform most of their work at night, traveling frequently between chain branches across the country to carry out inventory counts.
Fortissimo, led by Yuval Cohen, is Israel’s second-largest private equity fund and has raised $2.7 billion to date across six funds. The fund holds a series of companies in the industrial, health care and technology sectors, including Rhenium, Tuttnauer and pharmaceutical company CTS, which is currently in the process of being sold to Dexcel Israel.
One of the fund’s most prominent investments is its controlling stake in cellphone company Cellcom, where Fortissimo has managed to double the value of its investment in about two years. The fund even hired international investment bank Citi to examine options regarding its holding in the company. Last week, however, Cohen said at a Calcalist conference that he does not currently intend to sell Fortissimo’s Cellcom shares.
The Priority acquisition
If the RGIS deal goes ahead, it will be the second transaction Fortissimo has carried out with Blackstone. In May 2024, Blackstone acquired control of 70% of software company Priority Software from Fortissimo and U.S. investment fund TA Associates at a valuation of $800 million, about 3 billion shekels at the time.
Until that transaction, Fortissimo and TA each held 50% of Priority. Each fund sold 35% to Blackstone, and each retained a 15% stake in the company.
The sale to Blackstone represented a significant exit for TA and Fortissimo. Fortissimo acquired Priority when it was still operating under its former name, Eshbel Technologies, from a receiver, after the company entered insolvency because of tax evasion by its owners at the time. Fortissimo paid 192 million shekels in 2013 for all of the company’s shares.
Fortissimo sold half of the shares to U.S. fund TA in 2020 for $125 million, reflecting a valuation of $250 million. Blackstone paid each of the funds $280 million for the shares it acquired in Priority. Priority develops enterprise resource planning software for managing company resources, including finance, human resources, procurement and logistics. At the time of the Blackstone deal, it had about 75,000 customers in roughly 70 countries.
Blackstone manages private investment funds. It was founded 40 years ago and today manages $1.3 trillion in assets, making it the world’s largest alternative asset manager. Blackstone opened an office in Israel in April 2021 and appointed Yifat Oron as CEO of its Israeli operations. Oron left her position as CEO of LeumiTech, Bank Leumi’s high-tech arm, for the role. Priority was the first major significant deal Blackstone carried out in Israel after opening its local branch.