At 8:30 am yesterday, a tourist bus left a Tel Aviv hotel and headed for southern Israel. Its passengers seemed like ordinary tourists paying a visit, wearing jeans, T-shirts, and speaking American-accented English. The group’s schedule also seemed typical of a tour group: a visit to Masada via Jerusalem, lunch at Dead Sea Works Ltd., and back in time to catch a plane home that night. Only one event in the schedule set this group apart: a meeting in the afternoon with former Prime Minister Ehud Barak at the Israel Air Force Flight School at the Hazerim Air Force Base. This is not a place where tourists are normally allowed to enter.
This was the trillion-dollar bus that travelled across Israel over the preceding week. Its passengers were a group of foreign investors that included executives of US pension funds, representatives of investment funds, and a number of private investors. Tamir Fishman Venture Capital (TASE: TFVC) organized yesterday’s jaunt through southern Israel.
Backed by the the World Pension Forum, the delegation arrived in Israel on Sunday, and spent the week getting an intensive tutorial about the Israeli political and economic climate. Among other things, the delegation attended Tuesday’s Israel Venture Association conference and members were dinner guests of Prime Minister Ehud Olmert.
The delegation had a crowded schedule. Between meetings with politicians and economic leaders, the agenda included meetings with capital market people and, most importantly, venture capitalists. Yesterday’s schedule began at 7:30 am with breakfast at Excellence Nessuah investment house, followed by Tamir Fishman’s trip, and ended at 8:30 pm with dinner with Carmel Ventures’ partners. Quite exhausting. In addition, Israelis are not the only ones celebrating the arrival of big money from abroad. Today, delegation members visited Aqaba, Jordan, met King Abdallah II and top ministers.
It’s hard to calculate exactly how much the tour bus was worth. Most of the 38-member delegation were representatives of large North American pension funds, including California Public Employees Retirement System (CalPERS), which manages $140 billion, and California State Teachers Retirement System (CalSTERS), which manages $120 billion. They are considered the two largest funds in the US. Two pension funds managed by New York State Comptroller Alan Hevesi, New York State and Local Employees’ Retirement System, which manages $120 billion, and New York State Teachers' Retirement System, which manages $90 billion, also sent representatives.
Other delegates included representatives of Alaska's Public Employees' Retirement System, which manages $15 billion; Oregon Public Employees' Retirement System, which manages $40 billion; Pennsylvania State Employees' Retirement System (PaSERS), which manages $70 billion; Massachusetts Public Employee Retirement Administration Commission (PERAC), which manages $45 billion; and Canadian pension funds that manage $60 billion. Other delegates represented $100 billion in corporate pension funds, such as the fund of Eastman Kodak Co. (NYSE:EK), which manages $15 billion, as well as private investors whose capital is unknown. Altogether, the delegates on the bus manage an estimated $1 trillion, probably making it the most expensive bus ever to travel on Israel’s roads.
All in all, this was a very important trip for foreign investment in Israel. The delegates represented funds that invest directly or indirectly in the Israeli economy. Some funds invest in foreign venture capital funds that have holdings in Israel, or own stocks of Israeli companies listed on Nasdaq. Some, such as CalPERS, directly invest in Israeli venture capital and private equity funds.
The great hope is that the delegates, most of whom were not driven by Zionist motives to visit Israel, indicate an increase in capital inflows to the Israeli market, and will open new doors for Israeli venture capital funds. Israeli venture capital has been seeking big money in the US for a long time, and most investment in these funds comes from abroad. That said, the arrival in Israel of the first such a large delegation at the very least reflects the interest that Israel arouses in North America.
Published by Globes [online], Israel business news - www.globes.co.il - on June 22, 2006
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