ETF News

Israel's Eucalyptus gets green light for retail focused-tech fund

TEL AVIV, Dec 11 (Reuters) - Israel has approved Eucalyptus Innovation Capital to manage a new state-guaranteed technology investment fund, one of four that are planned to boost retail investment in high tech companies.

Eucalyptus said on Monday the fund would be traded on the Tel Aviv Stock Exchange and given state protection for some losses.

The Finance Ministry and Israel Securities Authority said in July they were looking for firms to manage four new funds that would enable the general public to invest in the country’s high-tech industry, including private startups.

The government is under pressure to attract more local investment into the country’s thriving technology sector which tends to be dominated by international investors.

Most of the capital invested in Israeli start-ups is in research and development and many are acquired early on by multinationals.

The Finance Ministry had no immediate comment. The Securities Authority said a statement was expected later.

Eucalyptus, which is in an advanced stage of fundraising, is managed by four veterans of Israel’s high-tech and finance industries: Eldad Tamir, head of the Tamir Fishman investment house; David Perlmutter, former chief product officer at Intel Corp; Amir Gal-Or, managing partner of Infinity Group; and Adi Gan, a partner in Evergreen Venture Partners.

“If you look at the Israeli economy, there is a consensus that the locomotive of growth is based on high-tech and innovation,” Tamir told Reuters.

Perlmutter said there had been a “huge disconnect” between the local capital market and the high tech industry and the new funds would be a first step towards changing that.

Each government-approved fund must have a minimum of 400 million shekels ($114 million) under management and invest in both private startups and public tech stocks.

“The vision is to build a very large asset class. It doesn’t make sense to build a $100 million fund, it’s a starting point,” Tamir said.

The government will provide each fund with guarantees of up to 50 million shekels. The funds will also be able to raise credit backed by the state of up to 100 million shekels. ($1 = 3.5222 shekels) (Reporting by Tova Cohen. Editing by Jane Merriman)