JPMorgan Chase to buy Conduit stake for $100m

Yozma will reportedly sell 7% of Internet company Conduit to JPMorgan Chase at a company value of $1.3 billion.

Sources inform ''Globes'' that Yozma Venture Capital is in advanced talks to sell its remaining 7% stake in Internet company Conduit Ltd. to a leading investment bank for $100 million, three weeks after selling 2% of the company. The foreign bank is reportedly JPMorgan Chase & Co. (NYSE: JPM). The deal gives Conduit a market cap of $1.3 billion.

Yozma managing partner Yigal Erlich declined to comment on the report.

An investment by JPMorgan is an important step for Conduit to consolidate its position in the global internet industry. JPMorgan, one of the world's largest banks, is handling the pending IPO of Facebook Inc.

The Yozma III Fund, in which Ofer Holdings Group unit Ofer Hi Tech Ltd. owns 30-40%, acquired 9% of Conduit for $1.5 million in 2006. Five years later, the $50 million fund, founded in 2001, is nearing its end, and it is therefore selling its holdings.

In February, "Globes" reported that Yozma was in talks with Silver Lake to sell its 9% stake in Conduit, but the talks broke down. Yozma subsequently split the sale into two parts, selling 2% of Conduit to W Capital Partners. It was joined by several Conduit executives, who sold shares for $15 million.

In the past, Conduit CEO Ronen Shilo has said that he had no plans for the sale of the company, or an IPO, at least for now. As part of this strategy, the company allowed employees to sell shares in Yozma's first deal, after distributing a NIS 200 million dividend in 2011. The company is expected to distribute another dividend to employees this year, possibly even larger than the previous one.

Shilo founded Conduit in 2005 together with Dror Erez and Gaby Bilczyk. The company's software platform enables content providers and advertisers to build, without effort, a toolbar that will strengthen the connection with the user, who adds to the toolbar to his or her browser. The company recently changed its strategy and rebranded to provide a closer connection between internet users and content providers. This includes the launch of a mobile solution for branded lock screens for Android-powered handsets for large content providers such as CNN and ESPN.

For Conduit, the idea is to create new income sources by enabling content providers to brand the lock screen of users' mobile phones. The users can reach various apps via the lock screen, such as calls or the camera, as well as receiving relevant content from the provider. Conduit says that this is a decorated screen, which saves the user the need of making several clicks and offers personalized content quickly. At the same time, the content provider has access to the first screen that the user sees.

"Globes" named Conduit as one of Israel's most promising start ups for 2011-12.

Published by Globes [online], Israel business news - www.globes-online.com - on April 9, 2012

© Copyright of Globes Publisher Itonut (1983) Ltd. 2012

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