1. An investment of $250 million in a fund is a reasonable-sized deal for a concern like IDB: not negligible, but not huge either. The importance of it is mainly political.
At a time when Israel is not exactly popular around the world, particularly the Arab world, the agreement by two large investment companies from the Gulf states to cooperate with an Israeli group is no trivial matter. It can even be assumed that they will come under fire for it.
For the Saudis this is less worrying. There it's a matter of a private body that can always use the Qatar government as a fig leaf for the approval of an investment alongside an Israeli company. The participation of Qatar however has real significance, because that is a matter of a sovereign fund of a very rich and important Arab country.
Make no mistake. The investment giants of Qatar and Saudi Arabia don't really need IDB's $250 million to launch the fund. Therefore, their decision to involve an Israeli company can be seen as a kind of economic-diplomatic declaration of their readiness to cooperate with Israel.
2. For along time, Nochi Danker has wanted to embark on overseas investments. So far, he has made no substantial acquisition, apart from taking a stake in Credit Suisse, which is a semi-financial investment. In any event, it's not a matter of buying control of a company, which is how he conducts his investments in Israel.
Dankner has found out that it's cold out there, and not at all easy to make material acquisitions overseas, especially in developing countries, which is where the new fund is meant to invest. The mentality, connections, and added value of IDB don't work abroad the way they do in Israel.
Setting up an investment fund with three foreign partners is a convenient solution for Dankner to the problem of entering emerging markets. The fund will be managed by professionals, but Dankner will be involved in decision making. He can thus benefit from the expertise of others, learn, and forge connections that in the future will enable him to make deals in the countries in question independently.
Published by Globes [online], Israel business news - www.globes-online.com - on August 12, 2010
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