Private Equity Deals in Israel Plunged 39% in 2013

Largest transaction of the year was $500 million buyout of Alliance Tire Group by KKR

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Private equity deals in Israel declined by 39% last year 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, the U.S. private equity fund, was the largest deal last year, accounting for nearly a quarter of the total.

Israeli private equity fund investments accounted for $519 million, or 24% 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.

The 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 the 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.

An Alliance Tires plant. KKR's buyout of the group accounted for nearly a quarter of all private equity deals in Israel in 2013.

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