Investment Focus: Mid-Tech
Mid-Tech Industries are Israel's Economic Staple
Tene II is uniquely structured and positioned to capture the investment
opportunities in Israel’s mid-tech sector and kibbutz companies in particular.
The investment focus on mid-tech companies is a focus on mature industrial
companies, with competitive advantages in technology, production-processes,
brands, or markets, with a moderate level of R&D expenditure.
Typically, our portfolio companies have most of the following characteristics:
The Fund's scope is on one of the strongest segments in the burgeoning Israeli
economy, with an estimated 5,400 businesses now operating. The sector
includes leading companies in key growth sectors, including water treatment
and resource management, various clean technologies and homeland security.
The sector produced about 45% of Israel’s overall industrial production in 2006
and since 2001 has generated five-year CAGR of over 12%, with annual export
growth approaching 15%. Many of these companies have significant
competitive advantages in the global markets in which they operate.
Source: Central Bureau of Statistics, Israel
:
Tene II is uniquely structured and positioned to capture the investment
opportunities in Israel’s mid-tech sector and kibbutz companies in particular.
The investment focus on mid-tech companies is a focus on mature industrial
companies, with competitive advantages in technology, production-processes,
brands, or markets, with a moderate level of R&D expenditure.
Typically, our portfolio companies have most of the following characteristics:
- Annual sales in the US$20-$150 million range;
- Strong cash-flow;
- A business culture that favors strong technology and innovation;
- An export focus and are capable of global growth; and
- Track record of growth and significant potential for future growth.
The Fund's scope is on one of the strongest segments in the burgeoning Israeli
economy, with an estimated 5,400 businesses now operating. The sector
includes leading companies in key growth sectors, including water treatment
and resource management, various clean technologies and homeland security.
The sector produced about 45% of Israel’s overall industrial production in 2006
and since 2001 has generated five-year CAGR of over 12%, with annual export
growth approaching 15%. Many of these companies have significant
competitive advantages in the global markets in which they operate.
Source: Central Bureau of Statistics, Israel
:
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Despite the impressive performance and potential of Israeli mid-tech enterprises,
most of the past decade’s external investment targeted high-tech
entrepreneurial ventures. In the meantime, mid-tech was virtually overlooked as
it carved out new market niches around the world, made strategic acquisitions
and posted both steady growth and profits.
This focus was transformed in May 2006 when Berkshire Hathaway’s acquisition
of an 80% stake in Iscar focused attention on Israel’s mid-tech industry and its
investment potential. The Iscar transaction signaled a change in perspective
regarding the mid-tech sector with increasing investor interest and subsequent
flow of funds.
By focusing on market and product niches, many Israeli mid-tech companies have
been able to attain global market leadership positions. Several of Tene II's first
portfolio companies reflect this: CaesarStone, Ricor, Chromagen and Teldor have
all achieved strong positions in their niche markets.
Mid-tech also includes some of Israel’s most recognized brands, both domestically
and in international markets, for example: Keter -- consumer product innovator;
Netafim -- the world leader in low-volume irrigation systems (drip irrigation);
Ormat Technologies -- geothermal power leader; and, Ahava -- body treatment
product producers.
Fundamentally, mid-tech is an attractive investment because of the combination
of stable, growth companies with relatively low valuations.
most of the past decade’s external investment targeted high-tech
entrepreneurial ventures. In the meantime, mid-tech was virtually overlooked as
it carved out new market niches around the world, made strategic acquisitions
and posted both steady growth and profits.
This focus was transformed in May 2006 when Berkshire Hathaway’s acquisition
of an 80% stake in Iscar focused attention on Israel’s mid-tech industry and its
investment potential. The Iscar transaction signaled a change in perspective
regarding the mid-tech sector with increasing investor interest and subsequent
flow of funds.
By focusing on market and product niches, many Israeli mid-tech companies have
been able to attain global market leadership positions. Several of Tene II's first
portfolio companies reflect this: CaesarStone, Ricor, Chromagen and Teldor have
all achieved strong positions in their niche markets.
Mid-tech also includes some of Israel’s most recognized brands, both domestically
and in international markets, for example: Keter -- consumer product innovator;
Netafim -- the world leader in low-volume irrigation systems (drip irrigation);
Ormat Technologies -- geothermal power leader; and, Ahava -- body treatment
product producers.
Fundamentally, mid-tech is an attractive investment because of the combination
of stable, growth companies with relatively low valuations.
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| Contact Tene Capital 4 Berkovich Street, Tel-Aviv 64238 Israel Tel: 972 3 609 3525, Fax: 972 3 609 3530 |
| Find out more about Tene's Investment Focus Israel: Fertile Conditions for Investment Kibbutz Companies: Choice Fruits of the Mid-Tech Sector |
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