Markstone Capital Partners Group LLC is in preliminary talks to sell its stake in irrigation systems maker Netafim Ltd. Sources inform ''Globes'' that a US private equity fund General Atlantic LLC (GA) is one of the companies interested in acquiring the stake.
Markstone reportedly wants to sell its 14% stake in Netafim (with an option to increase the holding to 20%) at a company value of $650-700 million. Netafim's other shareholders are Tene Capital Ltd., Kibbutz Hatzerim, with a 43% stake, Kibbutz Magal with 22%, and Kibbutz Yiftach, with 6%. Netafim chairman is Israel Makov.
Netafim is a global leader in the development and manufacture of irrigation systems. The company's main factory is at Kibbutz Hatzerim in the Negev, and it has other factories at Kibbutz Magal and Kibbutz Yiftach, and representative offices worldwide. The company's flagship products are water-saving drip irrigation pipeline systems.
GA is a veteran private equity fund that specializes in providing capital and strategic support for growth companies. It says that it has $15 billion under management and invests $50-500 million in companies, sometimes as a minority shareholder, and sometimes as the controlling shareholder. Previous investments in Israel include PowerDesign, Saifun Semiconductor, and Exanet, and it considered investing in Retalix Ltd. (Nasdaq: RTLX; TASE: RTLX).
Markstone currently books its investment in Netafim at a value of $100.3 million, after investing $44 million in the company in 2006. Markstone will therefore see a return on investment of more than 100%.
If a deal is closed, it is not yet clear which shareholders will join the deal, but Markstone will clearly be pleased by a deal. In August, "Globes" revealed that Markstone, run by managing directors Ron Lubash and Amir Kess, does not plan to make new investments; in other words it will not use the remaining 30% of the money it raised in its first fund, but that it is considering raising a second fund.,
In order to raise a second fund, Markstone must show results. One way of doing so is to sell portfolio companies, such as Netafim, Nilit Ltd., and Magnolia Silver Jewelry Ltd. Markstone invests in export-oriented Israeli companies, and most of its investors are US state pension funds, especially California Public Employees' Retirement System (CalPERS). Markstone raised $800 million in 2003-04, and has made $570 million in investments. Netafim is its most successful investment.
Published by Globes [online], Israel business news - www.globes-online.com - on November 9, 2010
© Copyright of Globes Publisher Itonut (1983) Ltd. 2010