Israel 2013 private equity deals drop, seen rebounding in 2014

JERUSALEM Wed Feb 5, 2014 6:20am EST

JERUSALEM Feb 5 (Reuters) - Private equity deals in Israel declined by 39 percent in 2013 to $2.2 billion, with the industrial sector pulling in the most investments, but stronger numbers are expected this year, the IVC Research Center said on Wednesday.

The $500 million buyout of Alliance Tire Group by KKR, a foreign private equity fund, was the largest deal last year, accounting for 23 percent of the total.

Israeli private equity fund investments accounted for $519 million, or 24 percent of total investments, down from $1.6 billion in 2012. It was the lowest share for Israeli funds in the last three years, according to the survey compiled by IVC and corporate law firm GKH.

Reasons for the decline include higher valuations offered by strategic buyers, a greater focus by private equity firms worldwide to realize profits on existing investments and a general sense of caution in investing, said Rick Mann, a partner and head of mergers and acquisitions at GKH.

The forecast for 2014 was positive, however, since Israel's government passed a law to increase market competition.

"Because of the large number of companies that are expected to be on the shelf as a result of Israel's recent legislation to restrict economic concentration and holding company structures, we believe that the coming year will offer significant opportunities for PE investment," Mann said. (Reporting by Ari Rabinovitch)