September 13, 2018 / 11:36 AM / 12 days ago

UPDATE 1-European Investment Fund makes first equity investment in Israel

(Adds quotes, details, background)

TEL AVIV, Sept 13 (Reuters) - The European Investment Fund (EIF) said on Thursday it was making its first ever equity investment in Israel with a $20 million investment in the ICV III venture capital fund.

The investment is a benefit of Israel’s participation in Horizon 2020, the European Union’s framework programme for research and innovation, said the EIF, which is part of the European Investment Bank.

ICV’s third fund will invest in Israeli seed and early stage companies developing software, hardware and infrastructure innovation in the areas of resource efficiency and sustainability.

The fund, it said, will target companies promoting ways to modernise industries, particularly those that have been slow to adopt new technologies.

ICV, which invested over $150 million from its first two funds, is in the process of raising $75 million for the new fund. It expects to complete the fundraising in the next few months.

“As an anchor investor EIF is committed to crowding additional resources from other entities ... so that ICV can reach its target size of $75 million,” EIF Chief Executive Pier Luigi Gilibert told a news conference.

He said the EIF’s board was expected to soon approve an equity financing deal with another fund in Israel.

The EIF’s mission is to help Europe’s micro, small and medium-sized businesses (SMEs) access finance.

In December the EIF and Leumi, Israel’s second-largest bank, renewed an initiative to increase lending to innovative SMEs. The initiative enables Leumi to provide financing of up to $200 million to Israeli technology companies with the support of an EIF guarantee.

“We are now in discussions with another Israeli bank to have a similar programme,” Gilibert said. (Reporting by Tova Cohen Editing by Matthew Mpoke Bigg)

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