Treasury issues tender for high-tech funds

Tel Aviv Stock Exchange Photo: Eli Yizhar
Tel Aviv Stock Exchange Photo: Eli Yizhar

Investors in the Israeli funds will receive state protection against losses.

The Ministry of Finance Accountant General department today published a tender for the selection of managers for funds that will invest in high tech companies. The funds will be listed on the Tel Aviv Stock Exchange (TASE), while the state will provide both protection against the investors' losses in the funds and guarantees for raising credit.

The tender was jointly initiated by the Accountant General department and the Israel Securities Authority. Four mutual fund managers who meet the tender conditions will be selected in the tender. A minimum of NIS 400 million in participation units in the funds will be listed on the TASE.

Most of the capital currently invested in Israel companies dealing in research and development of high tech is foreign capital, and a large proportion of the companies are acquired by foreign corporations at relatively early stages in their development. The Israel capital market is thus denied the opportunity to enjoy the fruits of those companies.

The new funds will combine investments in marketable technology shares with a substantial volume of investments (at least 30%) in technology companies in the early stages (startups). This will enable investors in the Israeli capital market, including investment institutions, to benefit from the potential return contained in the Israeli innovation industry in a relatively safe format through state participation in losses, if any. The state will allocate NIS 50 million in protection for each fund that fulfills the tender conditions.

The funds in the tender, led by the Accountant General department financing and credit section, will be allowed to raise credit backed with a state guarantee of up to NIS 100 million per fund, thereby leveraging the investors' money in the fund and increasing their potential return.

The funds will be founded on the basis of regulations for joint investments in high-tech mutual funds issued in September 2016, to which the tender adds state protection.

Minister of Finance Moshe Kahlon said, "The new funds combine two important goals of the Ministry of Finance: opening a new investment instrument for pension savers and providing a new source of capital for the Israeli high-tech industry, which currently relies mostly on foreign sources. We will continue strengthening all sectors of Israeli industry."

Ministry of Finance Accountant General Rony Hizkiyahu added, "We are using the great know-how accumulated in the Accountant General department in order to promote innovative financing tools that support the Ministry of Finance's strategic aims, headed by the increase of growth and productivity. The new funds will enable pension savers to benefit from the success of the Israeli innovation industry."

Israel Securities Authority chairman Prof. Shmuel Hauser said, "Our proposal was designed to create an investment instrument for the general public that will enable it to participate for the first time in the success of Israeli technology companies, while providing state protection. This is another important tool we have advanced in order to support small companies and technology companies.

Tenders committee chairman Yaheli Rotenberg said, "This is an innovative and unique financing model - the result of hard work by professional teams in the Accountant General department, the Securities Authority, the Capital Market Authority, the Budget Department, and the TASE."

Published by Globes [online], Israel Business News - www.globes-online.com - on July 9, 2017

© Copyright of Globes Publisher Itonut (1983) Ltd. 2017

Tel Aviv Stock Exchange Photo: Eli Yizhar
Tel Aviv Stock Exchange Photo: Eli Yizhar
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