Sources inform ''Globes'' that Fortissimo Capital has begun raising $250-300 million for its third fund. The private equity fund's partners have been meeting with potential investors in recent weeks to present the fund's fundraising and strategic plan.
Fortissimo declined to comment on the report.
Fortissimo's recent success with the sale of dental imaging device developer Cadent Holdings Inc. to Align Technologies Inc. (Nasdaq; ALGN) for $190 million in cash follows the success of Sodastream International Ltd. (Nasdaq: SODA) in which Fortissimo made a gain of $240 million. It seems that Fortissimo want to leverage its successes into a new fund, and quickly.
Fortissimo was founded in 2004 with an $80 million fund, by four men who were childhood friends: Yuval Cohen, Eli Blatt, Marc Lesnick, and Yoav Heinman. It chalked up strong returns quite quickly, and it can be considered a star in the Israeli high-tech firmament. The Fortissimo I Fund reportedly has a return on investment of over 50%, a phenomenal figure for a private equity fund with a conservative investment model.
The Fortissimo II Fund was launched in 2008 with $150 million. The company raised a large part of the capital for the two funds from Israeli institutional investors, including the big banks, Israel Phoenix Assurance Ltd. (TASE: PHOE1;PHOE5), Migdal Insurance and Financial Holdings Ltd. (TASE: MGDL), and Menorah Mivtachim Holdings Ltd. (TASE: MORA), and from pension funds of Psagot Investment House Ltd. and Mivtachim.
In view of Fortissimo's strong performance to date, there is no reason for these investors not to continue investing in it. However, this time Fortissimo is more ambitious, and is seeking foreign capital as well.
Fortissimo likes to describe itself as a private equity fund that invests in manufacturing and high-tech companies at the inflection point. Its strategy is to locate companies with high potential, invest in them along with intensive involvement by its partners, and boost the companies' sales and profits. This was Fortissimo's modus operandi to bring Sodastream to Nasdaq, and with the sale of Cadent and Nur Macroprinters.
Fortissimo's portfolio companies include AOD Software Ltd., acquired in 2007 and which is developing integrated healing software for the elderly and old-age homes; and Emblaze Ltd. (LSE: BLZ), which sold its main holding, Formula Systems Ltd. (Nasdaq: FORTY; TASE: FORT) at a profit of $35 million in September 2010.
Fortissimo has also generated controversy, after announcing last August that it would invest in 3D printing solutions developer Solido. Fortissimo's withdrawal of the offer led to Solido's collapse.
Published by Globes [online], Israel business news - www.globes-online.com - on April 27, 2011
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