Private Equity Fund FIMI in Talks to Buy G4S Israel

Price could reach 400 million shekels for controversial local unit of British security giant.

Eran Azran
Eran Azran
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G4S PLC
Eran Azran
Eran Azran

G4S, the giant British-based security company that is under pressure for providing services in Israel, is in advanced talks to sell its Israeli unit to the private equity fund FIMI for a price that could reach 400 million shekels ($104.9 million.)

The talks come five months after G4S announced it was selling its Israeli unit for what it called “commercial reasons.” But activists for the boycott, divestment and sanctions (BDS) movement hailed is as a victory in its campaign against the company for proving services that aid the occupation.

In spite of the planned sale, the British company remains in the crosshairs of the boycotters. On Wednesday, the British Telegraph reported that the Labor Party may have to cancel its annual conference because it hasn’t succeeded in finding a replacement for G4S, which it is boycotting, to provide security for the event.

The Israeli unit, which G4S acquired in 2002 when it was a local company called Hashmira, employs some 8,000 people and has an annual turnover estimated at between 600 million and 800 million shekels.

It is the largest private security company in Israel today, providing not only guards for institution and companies, but also alarm systems and security technology like metal detectors.

Among its more controversial activities are operating the Ofer Prison, which holds Palestinian prisoners, and staffing West Bank checkpoints. However, the company said two years ago it would not renew those contracts.

For FIMI, Israel’s oldest and largest private equity fund, buying G4S Israel would be a departure from its usual acquisitions strategy. Led by Yishai Davidi, the fund has bought 83 companies – and subsequently sold 51 of them – for a combined $4 billion. Last month, it completed a $1.1 billion fundraising for its sixth fund.

FIMI generally targets companies that are technology leaders in their industries, enjoy high barriers to entry or are financially ailing and can be bought cheaply. G4S Israel offers none of these, but Davidi reportedly believes that the company’s business model can be used to expand the business overseas.

Industry sources estimated FIMI will ultimately offer somewhere between 350 million and 400 million shekels for the company. That would work out to a multiple of six or seven times its earnings before interest, taxes, depreciation and amortization, or Ebitda, which is believe to be about 60 million shekels annually.

Elco Holdings, another potential buyer for G4S, explored the idea of a deal this spring but abandoned it.

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