May 13--Private equity funds invested $349 million in 12 deals in the first quarter of 2014, 141% more than the $145 million invested in 14 deals in the corresponding quarter of 2013, and 51% more than the $231 million invested in eight deals in the preceding quarter, reports the IVC Research Center and Gross, Kleinhendler, Hodak, Halevy, Greenberg & Co.
The largest transaction was a $115 million buyout of NSO Group Technologies Ltd. has been acquired by US private equity fund Francisco Partners LLC. Two additional deals exceeded $50 million each.
Israeli private equity funds increased their activity in the first quarter, investing $202 million or 58% of total private equity investments. This amount is 21% less than the $257 million three-year average, but almost three times the $68 million invested in the preceding quarter, which was the lowest quarter for these funds in 2013. The largest deal was the $73 million acquisition of Gadot Chemical Tankers and Terminals Ltd. by Tene Investment Funds Ltd.
Four Israeli private equity funds raised $398 million altogether in the first quarter.
"In the first quarter of 2014 we saw the comeback of private equity deals in technology industries, which accounted for 62% of total private equity deal value," said IVC research manager Marianna Shapira. "While in 2013 both Israeli and foreign investors focused on traditional industry, that year diverged from the norm. In the two previous years -- 2011 and 2012 -- the majority of private equity activity was in technology fields, reaching 75% and 85%, respectively. An emphasis on transactions in high-technology fields will most likely continue in 2014."
"The Israeli M&A market continues to show signs of strength, and we have seen increased competition between private equity players and strategic acquirers," said GKH partner and head of M&A Rick Mann. "Hesitation by local banks in offering acquisition financing may be making it more difficult for those potential acquirers seeking to leverage their transactions. Israeli private equity funds continue to be a strong force in the market, and we may see more private equity funds targeting the local market."
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