Sources inform ''Globes'' that First Israel Mezzanine Investors Fund (FIMI) is in advanced talks with Chinese investors to invest tens of millions of dollars in its new fund. This is apparently the first time that Chinese investors will invest in an Israeli private equity fund.
The FIMI V Fund is due to become the firm's largest fund in its 16-year history, amounting to $800-850 million, half from Israeli investors. Most of Israel's large investment institutions and banks will likely invest in it. The rest of the capital will come from foreign investors, mostly from the US and Europe. FIMI expects to complete the financing by the end of June.
FIMI said in response, "FIMI is raising capital, and it is not interested in commenting on the report at this time."
According to Preqin, which analyzes the results of more than 5,700 private equity funds worldwide, FIMI investors have achieved an average internal rate of return (IRR) of 31% over the years. This fact has made it attractive for investors, especially given the current capital market volatility, which is making it hard for private equity finds to achieve high returns for their investors.
FIMI was founded in 1996 and raised $130 million for its first fund. It has held three subsequent financing rounds, raising a total of $1.1 billion for four funds, including $500 million for the FIMI IV Fund in 2008.
FIMI invests in mature manufacturers in two ways: through buyouts, usually with partners; and through financial investments in the form of mezzanine loans with no collateral, but with options to convert the loans into equity.
FIMI's successful investments include Lipman Electronics Engineering Ltd. Tadiran Communications Ltd., Matrix IT Ltd. (TASE:MTRX) and Tadir-Gan (Precision Products) Ltd. (TASE: TDGN), in which it reacquired control last year, after selling its first investment in the mid-2000s. In 2011, FIMI had six exits for a total of NIS 850 million, on which it made a capital gain of NIS 540 million. So far in 2012, it has sold its investments in Merhav Ceramics and Building Materials Center Ltd. (TASE: MRHV), Metro Motor Marketing Ltd. Ophir Optronics Ltd. (TASE: OPIR), Solbar Industries Ltd. (TASE: SLBR), and Schneider.
Earlier this year, FIMI made its biggest investment to date - $150 million in geothermal energy developer Ormat Industries Ltd. (TASE: ORMT), to become the co-controlling shareholder together with its founders, the Bronicki family. Each party now owns 22.5% of the company.
Published by Globes [online], Israel business news - www.globes-online.com - on May 21, 2012
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