Clal Biotechnology Industries Ltd. (TASE: CBI) has taken another step toward setting up three new investment funds. The company has signed agreements with Migdal Insurance and Financial Holdings Ltd. (TASE: MGDL) and Harel Insurance Investments and Financial Services Ltd. (TASE: HARL) to partner in the funds. Clal Biotech previously announced that it planned to set up funds that will manage NIS 225 million to invest in Israeli medical devices companies, and today signed the official agreement.
Nochi Dankner-controlled IDB Holding Corp. Ltd. (TASE:IDBH) unit Clal Industries and Investments Ltd. (TASE: CII) owns 56.6% of Clal Biotech. This morning, IDB Holding announced that its holding company IDB Development Corp. Ltd. was in talks to sell control of Clal Industries. The sale should not affect Clal Biotech's plans to set up and operate the new funds.
Clal Biotech operates as a holding company in the life sciences. The establishment of the funds will diversify its operations in the medical devices sector, while retaining its core business in the pharmaceuticals sector. At the same time, Israeli medical devices companies will see an additional source of financing at a time when they face difficulty in raising capital on the Tel Aviv Stock Exchange (TASE), due to the market conditions.
Clal Biotech said that three funds would be set up, which would operate under the Ministry of Finance's "Comparative Advantage" plan to encourage Israeli financial institutions to invest in high tech. Clal Biotech will provide 50% of the NIS 225 million commitment, Migdal will provide 30%, and Harel 20%. The funds' managing partner will be a wholly owned subsidiary of Clal Biotech.
As soon as it signed the agreement with Migdal and Harel, Clal Biotech promised that all its medical devices activity, with a few exceptions, will be carried out through the funds. As "Globes" was the first to report, the first investment by a fund has already been made, in cardiology company Pi R Squared Ltd.
Clal Biotech's share price rose 4.6% by early afternoon on the TASE today to NIS 19.25, giving a market cap of NIS 1.9 billion.
Published by Globes [online], Israel business news - www.globes-online.com - on December 25, 2011
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