Incubator co Capital Point funding disappoints

The firm's share fell 19.6% yesterday after it raised NIS 8.8 million.

Capital Point Ltd. (TASE:CPTP), which owns the Ofakim Hi-Tech Ventures and Meytag Technology Incubator incubators raised NIS 8.8 million gross in an offering of shares and warrants on Sunday, less than its NIS 13 million target.

Capital Point issued the shares at NIS 5 per share. The effective price, taking the two series of warrants into account was NIS 4.06. Before the company disclosed the share price of the offering, the price was NIS 5.48; the share price plummeted 19.6% yesterday to NIS 4.40. It rose 1.6% by mid-afternoon today to NIS 4.48, giving a market cap of NIS 33 million.

The funding will enable Capital Point to make supplementary and follow-on investments in companies that graduated from the two incubators. Follow-on investments are a major challenge for incubator holding companies. If the incubator cannot participate in companies' subsequent financing rounds, following the set-up investments, the incubator will struggle to avoid large dilution in its stakes in the companies, to the point of losing the investment altogether. Financial soundness is therefore critical for incubator holding companies.

Capital Point currently has stakes in 30 companies that graduated from its two incubators. It also has small stakes in several other companies, such as feminine hygiene products company ConTIPI Ltd., which was due to be acquired by Procter & Gamble Company (NYSE: PG), before the deal fell through.

Published by Globes [online], Israel business news - - on October 19, 2010

© Copyright of Globes Publisher Itonut (1983) Ltd. 2010

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