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Overview
Israel is a small country with a small economy, surrounded by hostile neighbours and
facing constant geopolitical uncertainties. On the face of it, investing in Israel seems
to be an irrational business decision. Nevertheless, Israel is a prime destination for a
wide range of investors. A strong combination of innovation and entrepreneurial drive
continues to attract to Israel the world’s leading technological companies, venture
funds, private equity funds and, more recently “crowd funding” investors, all of whom
are looking for the idea, the development, the product that is ahead of the field, either
for strategic reasons of simply for a financial return.
Microsoft, Apple, Facebook and Google have all made recent acquisitions in Israel,
highlighting Israel as a focal point of technological development for these global
giants. A number of Israeli companies have completed high profile public listings.
At the same time we are beginning to see more local technology companies making
their own acquisitions within Israel. The fact that Israeli companies are looking to grow
through local acquisitions is an indication that not all high-tech entrepreneurs are
looking for an early “exit”, and reflects a greater maturity in the Israeli high-tech sector.
This trend is boosted in part by the growing ability of the more mature Israeli hi-tech
companies to raise capital both privately and in public markets.
And it is not just in the technological sector. The Chinese State-owned Bright
Food Group in 2015 acquired control of Tnuva, Israel’s largest dairy concern, in a
deal valuing Tnuva at approximately US$2.5 billion. The seller was Apax Partners,
one of the world’s largest investment funds, which continues to look for investment
opportunities in Israel. This deal and others are indicative of the growing wave of
interest from China in the Israeli marketplace. Since the acquisition in 2011 by China
National Chemical Corporation (ChemChina) of Makhteshim Agan Industries, the
world’s largest generic agrochemical producer (now rebranded as “Adama”), there
has been a remarkable increase in Chinese investment in Israeli technology and
Israeli know-how.
Israel is a technological powerhouse. The Israeli business milieu is
cosmopolitan, business professionals are highly qualified, the courts are
well-regarded and impartial. The Israeli workforce is educated and skilled. So,
despite the apparent disadvantages, Israel continues to attract substantial
foreign investment.