Israel
Investment News
First
Quarter, 2003 - Volume Vii, No.1
In this issue….
·
First Israeli Company Enters the Nasdaq 100
Index
·
Tower Semiconductors Raises $35m
·
Israeli Funds Buck the Investment Trend
·
Hoover to Establish Israeli R&D Center
·
Intel Invests in Passave
·
AOL-Time Warner Invests in Big Band Networks
·
PwC Effort to Accelerate Israeli Biotech
·
Hitachi Set to Expand Israel Investments
….and more.
Veritas Buys Precise
Software for $557m- One of the Five All-Time Biggest Israeli Hi-tech Deals.
Despite the global
technology slump, US software giant Veritas has bought Israeli technology
company Precise Software Solutions for $557 million cash, making it one of the
five all-time biggest deals in Israeli high-tech history. Precise has been sold
to California-based Veritas Software Corporation, the world’s sixth largest
software company.
Both Israeli and
international market watchers were impressed by the fact that the Israeli
company was able to attract such a high price, paid in cash by an industry
heavy-weight, in the current global technology climate.
Veritas, with a $7
billion market value and $2 billion in cash, is offering Precise’s shareholders
$16.50 per share in cash, a 37% premium above Precise’s market price. Precise,
which develops application performance management solutions, has around $80
million in annual sales with $3-4 million in profit.
Veritas says that by
acquiring Precise it can provide a solution for IT professionals to run mission
critical applications with optimal performance and continuous availability.
Analysts predict that by 2006, this market will grow to $11 billion.
First Israeli Company
Enters the Nasdaq 100 Index
Teva Pharmaceutical Industries has become the first Israeli company to
enter the lucrative Nasdaq-100 Index. Teva, the largest generic drug company in
the world, has reached a market capitalization of $10 billion.
Whilst Israel has over 100 companies traded on Wall St, more than any
other country outside of North America, Teva is the first to be included in the
Nasdaq-100 Index. There are also over 30 Israeli companies traded on European
exchanges.
Teva is an Israel-based, global pharmaceutical company specializing in
the development, production and marketing of
generic and proprietary branded pharmaceuticals as well as active
pharmaceutical ingredients. In 2001, Teva, with over 9000 employees, posted an
impressive $2.08 billion in sales generating net income of $278.2 million.
Teva, which recently received FDA approval to market a generic version
of GlaxoSmithKline’s Augmentin antibiotic,
is also resposnsible for Copaxone, the first innovative drug to be developed in
Israel and to receive FDA approval. Copaxone is a unique multiple sclerosis
immunomodulator: the first and only non-interferon agent for the treatment of
relapsing-remitting multiple sclerosis.
Tower
Semiconductors Raises $35m
Tower Semiconductors,
an Israeli chipmaker, has completed a $35 million funding round. The round
included over $20 million from shareholders as well as $15 million from the
Ontario Teachers’ Pension Plan. The Canadian pension fund was issued with 3
million shares.
In total, Tower issued
over 7 million shares at $5 per share.
Tower sees the
Canadian investment as a vote of confidence in the company’s Fab 2 facility.
Tower chairman Idan Ofer said the new investment “reflects the ability of the
company to attract highly qualified institutional investors.”
Tower, based in Migdal
Ha’emek, is building a new, state-of-the-art semiconductor fab. The company
recently completed the first phase of the Fab 2 facility having successfully
implemented 0.18-micron technology while keeping to the project’s planned time
schedule.
Israeli Funds Buck
the Investment Trend: News in Brief
- US VC fund, Benchmark has
expanded its Israel fund by $40m, to $260m. The fund has already invested
in 8 Israeli companies.
- Israeli VC company, Evergreen
Partners has raised $95m for its 4th fund. By Q3 the company
hopes to have raised $150-170m for investment in Israeli companies.
- Vertex Israel has begun
managing Vertex Management Europe on behalf of the Singapore-based Vertex
Venture Capital Group. Vertex Israel now manages $650m, half the total
capital of the Vertex Group.
- The Israel Infinity Fund is
closing its second fund with $60-75m.
- The Ministry of Industry and
Trade’s Seed Fund has invested NIS 62m (shekels) (around $12.7m) in 25 new
projects.
- Vertex Management Israel has
opened a new office in London. The company already has offices in
Singapore, Beijing and Redwood City, California.
- The First Israel Mezzanine
Investors Fund is expanding its latest fund by an extra $70m on top of the
original $100m. The company has invested $300m since 1998.
Hoover Looking to
Establish Israeli R&D Center- Makes an Offer for Friendly Robotics
Famed vacuum-cleaner
manufacturer, Hoover has made an offer to acquire Israeli start-up Friendly
Robotics. According to market watchers, the US giant is looking to turn
Friendly Robotics into its development center in Israel, while retaining its 25
Israeli employees.
Friendly Robotics,
whose first product was a robotic lawn mower, develops and manufactures robotic
home appliances such as vacuum cleaners that do not require human users.
Current CEO Udi Peless and Senior VP R&D Shai Abramson founded the company
in 1995.
It is believed that
Hoover is offering Friendly Robotics $2 million.
TLCom, Texas
Instruments Invest $15m in IXI Mobile
IXI Mobile, an Israeli
wireless software solutions start-up has raised $15 million, completing a third
round of financing.
European venture
capital company, Tlcom Capital Partners, who invest in the communications and
information technology sectors, led the round. Tlcom was joined by previous
investors Texas Instruments, Draper Fisher Jurveston ePlanet Ventures and the
Gemini Israel Fund.
Founded in August
2000, IXI Mobile develops Bluetooth technology-based mobile personal
communications switchboards for short-distance wireless communications. The
company, who claims that its products enable lower cost, more variety and
faster deployment of mobile devices, intends to use the new funds to accelerate
product development and international marketing strategies.
Gilles Delfassy, Texas
Instrument’s Wireless Business Unit Senior Vice President and General Manager
said, “Texas Instruments recognizes the value of IXI Mobile’s unique solution,
particularly its Personal Mobile Gateway (PMG) technology, which will enable
network operators, service providers and device manufacturers to introduce new
devices and services to subscribers.”
Intel Invests in
Passave
Despite
the drought in global investment in telecommunications companies, Intel
Capital, the investment arm of Intel has invested $800,000 in Israeli start-up
Passave. This brings to $10 million the total amount raised by the company so
far. Intel joins the ranks of previous investors in Passave who include BRM
Capital, Walden International Investment Group and the Eurofund.
Passave
develops silicon chips to expand bandwidth in the “first mile” of optical
communications networks. The company recently completed development of two
chips designed to transmit 1 Gbps over the first mile.
Passave,
which is based on the fabless production model, hopes to use this latest
investment from Intel to complete development work of first-generation chips
and to launch its first product. This first product, designed for the optical
network access market, will provide broadband services for the home and
small-medium office.
Johnson & Johnson
Participate in TopSpin Medical $16.5m Investment
TopSpin Medical has closed a $16.5 million
second round of financing. Johnson & Johnson’s venture capital fund made
their second investment in TopSpin Medical as part of this second round that
was led by Pitango Venture Capital and Giza Venture Capital. Also participating
in the round were IIRF, Israel Seed Partners, Platinum and Neurone Ventures and
Peregrine Ventures.
TopSpin, founded in 1999, has developed
technology for conducting magnetic resonance imaging (MRI) procedures without
the use of external magnets. The company claims that this ability to do without
external magnets enables the extension of MRI technology to a wide range of
applications where conventional MRI is too bulky and expensive.
TopSpin’s technology allows high-resolution
local MRI to be conducted through a miniature, portable imaging probe that
contains all of the magnetic field sources required. By using the miniature
probe, the problem of the bulkiness of traditional MRIs is avoided while costs
are lowered. This is particularly helpful when conducting high-resolution
imaging of coronary artery walls during cardiac catherization.
Sequoia Partners
Amongst Investors as ProSight Closes $14m Third Round
Israeli
start-up ProSight, developers of portfolio management software, has raised $14
million in a third round of financing.
The round was led by Giza Venture Capital and supplemented by a $4
million investment from Genesis partners. Other investors in the round included
Sequoia Partners, BRM Capital and the Prism Opportunity Fund, all of whom were
existing investors in the company.
Jerusalem-based ProSight develops portfolio management software for
large enterprises that handle multiple projects simultaneously. The company
recently sold $2 million in licenses to Fujitsu Consulting with which it has a
partnership agreement. The partnership assists the company increase market
penetration and successfully complete product rollouts.
ProSight says it will use most of the newly raised funds to expand its
marketing and sales activities.
AOL-Time Warner
Invests in Big Band Networks
Israeli start-up Big
Band Networks has raised $27 million in a third round of financing. As part of
this round, the company has received a $3 million investment from the venture
capital fund of AOL Time Warner.
BigBand, who have
raised $60 million to date, develops broadband infrastructure systems for
television broadcasts. The company manufactures and develops Broadband
Multimedia-Service Routers (BMR), an integrated video, audio and data processor
that routes multiple media types in their native formats over broadband
networks.
Israeli media report
that the company has recently signed a $2 million deal with AT&T Broadband,
one of the five largest high-speed Internet and cable providers in the US.
BigBand Networks has
over 70 employees in Israel and 30 in the US.
Guardium Closes $4m
Round Led by Veritas, Cedar and Stage One
Herzliya, Israel-based
Veritas Venture Partners has co-led a $4 million first round of financing for
start-up Guardium with the Cedar Fund and Stage One Ventures.
Guardium develops
security solutions for databases used in distributed and Internet environments.
The company’s products enable corporations to safely extend their database
applications to offsite workers as well as clients and partners connected via
the Internet.
Guardium CEO and
founder Amnon Keynan says that the new investment will fuel company growth and
allow a wider market presence. The company’s SQL-Guard product enables
companies to safely extend the use of corporate applications, shielding the
databases while offering use of applications to customers and partners.
Veritas Partners
primarily invests in seed and early stage technology-based companies,
especially in the areas of network communications, Internet infrastructure,
enterprise software and medical devices. Veritas partner Gil Zaphrir said he
was particularly interested in Guardium due to the “pervasiveness of illegal
access into corporate databases from both external and internal sources.”
Guardium was founded
in 2002 by Log-On Software, a leading IT solution provider in Israel.
PwC Effort to
Accelerate Israeli Biotech
PricewaterhouseCoopers’
Israeli life sciences corporate finance group has joined in a new partnership
with Burrill & Company of San Francisco to provide global partnering services
for Israeli biotechnology companies. The new alliance is aimed at helping
Israeli biotechnology companies reach significant strategic global agreements.
PwC’s
Tel Aviv-based Life Sciences Transaction Support team has the dual advantage of
excellent local support relationships coupled with its worldwide partnering
activities. The company has extensive contacts in Israel with a number of local
biotech companies.
Burill
& Company, a merchant bank focused on the life sciences industries, largely
deals with companies in the pharmaceutical, diagnostic, healthcare and medical
technologies industries. The company has over $350 million under management. As
part of their initial research, Burrill & Company reviewed 120 of the top
life sciences operations in Israel. From that research, according to CEO Steven
Burrill, the company has “come up with an interesting list of companies that
have highly partnerable products and technologies.”
According
to PwC, the Israeli biotechnology industry excels at developing innovative
products yet often lacks the contacts and ability to form the best
collaborative relationships that allow the development and marketing of those
products. The new PwC and Burrill & Company alliance hopes to fill that
void.
Broadcom and Applied
Materials Fund Make First Israel Investment
Israeli start-up
M-Stream has received an investment of over $2 million from chip maker Broadcom
and Applied Material’s investment fund (Applied Ventures). This investment
represents both Broadcom and Applied Ventures’ first Israeli investment.
M-Stream, who develop
chips for the cellular industry, claims that their product improves performance
of both voice and data on cellular networks.
Applied Materials
already has a substantial presence in Israel, including an R&D center. The
company founded its investment arm, Applied Ventures, 18 months ago. The fund
focuses its investments on communications, optics and data storage.
Hitachi Set to Expand
Israel Investments
Japanese giant Hitachi
together with subsidiaries Hitachi Data Systems and Hitachi High-Tech are
currently examining new opportunities in the Israeli market, according to
Hitachi Israel country manager, Amikam Magen. The company has budgeted $1.25
billion for mergers and acquisitions during 2003 and is expected to invest
$6-11 million a year in Israeli start-ups. The company notes that it will
invest even more than this amount in Israeli companies, if suitable
opportunities arise.
Hitachi Data Systems,
who have had an Israeli presence since 1978, are particularly looking to invest
in Israeli companies that develop products in the storage, information security
and communications sectors. Hitachi has already invested an estimated $12
million in a number of Israeli companies, including cellular animator Bug Life,
Internet security company Sanctum, Pegasus, eCogNito and InfiniBand.
After investing in
Israeli companies, Hitachi is expected to sign OEM distribution agreements to
market and sell the companies’ products in Japan, as is Hitachi’s practice.
Vertex Management
Israel partner David Heller will manage Hitachi’s investments in Israel.
Drug Giant Novartis
Confirms Israel Expansion Plans
Novartis, one of the
world’s largest pharmaceutical companies plans to step us its activities in
Israel. The Basel, Switzerland-based pharmaceutical giant already has
operations in Israel and is looking to expand this presence.
Globally, Novartis has
74,000 employees and had sales of over $19 billion in 2001. In that year, the
company invested $2.5 billion in R&D.
Dr. Paul Sekhri,
Novartis’ senior VP and head of global search and evaluation recently visited
Israel. It was during this visit that Sekhri announced the company’s plans.
Novartis is seeking cooperative R&D ventures as well as acquisitions
amongst Israeli biotechnology and pharmaceutical companies. Sekhri leads a
committee to search and evaluate licensing opportunities for compounds,
technologies, platforms and corporate acquisitions.
Novartis currently
operates in 140 countries across the world.
Israel-South Korea
R&D Fund Approves Eight Grants
The Korea-Israel
Industrial R&D Foundation (KORIL-RDF) has approved grants for eight R&D
collaboration projects between Israeli and South Korean companies. In total,
the grants are worth $7 million.
In its two years of
existence, KORIL-RDF has made grants to three projects, valued at $1 million.
The foundation, run by the Ministry of Industry and Trade’s Office of the Chief
Scientist on the Israeli side, funds 50% of a projects costs. The foundation
also helps companies in one of the countries locate R&D partners in the
other.
Amongst the projects
already receiving grants are an interactive digital video broadcasting and
recording system for video-on-demand, an optical reader and translator of
Korean and an auto control system that can track, follow and map vehicles.
Other Israel
Investment News in Brief
- InterWise, an Israeli
e-learning company has raised $12m in a 4th round, from
existing investors.
- Ezchip Technologies, developers
of high-speed network processors, has raised $13.5m based on a company
valuation of $40m.
- Content security developer
Gilian Technologies has raised $10m. Investors include the venture capital
arm of Walt Disney Holding Co.
- Enterprise solution developer,
Actimize has raised $10m in a second round of financing.
- Nexus Telocation Systems, who
provide location-based services and automated meter reading, has received
an $8m investment.
- SANcastle, developers of
storage network switches, has completed a $9m internal round of financing.
- InkSure Technologies, who
develop ink-based document and brand authentication systems, has closed a
$6.7m financing round.
- Sapiens International has
received an additional $10m investment from Formula Systems.
- Federation, an Israeli start-up
that develops software to coordinate various development branches within
one company, has raised $6.75m.
- E-payment security company
Cyota has raised $8m. In total, the company has raised $22m.
Israel Investment News
Published by
Ministry of Industry
& Trade
Investment Promotion
Center
30 Agron St.,
Jerusalem
Israel
Tel. +972-2-622-0661
Fax. +972-2-622-2412
URL:
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Writer and Editor
Dani Wassner
Email:
dani@moital.gov.il