Migdal Insurance and Financial Holdings Ltd. (TASE: MGDL) is deepening its investments in the life sciences and medical devices industry by teaming up with Moshe (Mori) Arkin's Accelmed. Sources inform ''Globes'' that that the parties are formulating an agreement to jointly invest NIS 80 million in equal shares in life sciences companies.
AccelMed declined to comment on the report.
Migdal VP and head of investments Limor Danesh, who is heading the deal for the company, told "Globes" in response, "This is a collaboration agreement that will enable Migdal to benefit from the expertise of a partner with a proven track record in the field."
AccelMed chairman Arkin and managing partner Dr. Uri Geiger founded the firm in 2009 to exploit opportunities in medical devices during the economic crisis. They invested a few million dollars in three public companies at the time. Two of these companies have since been sold, and the sale of the third is pending. Ophthalmic Imaging Systems was sold to Merge Healthcare Inc. (Nasdaq: MRGE) for $30 million, giving AccelMed a 230% return on its investment. Edge Medical was sold to Dutch Claymount Assemblies BV, in a deal the terms of which were not disclosed, but which was apparently profitable for AccelMed. MCS Medical Compression Systems (DBN) Ltd. (TASE:MDCL) is currently in talks to sell its operations to a US orthopedics company for $75 million. If the deal is sealed, it will give AccelMed a 500% return on its investment.
In 2010, AccelMed changed its business model and invested in two early-stage companies that were not in distress: Nonlinear Technologies Ltd. and Peer Medical Ltd. AccelMed has said that it intends to make large private equity investments in Israeli and non-Israeli medical devices companies.
An insurance company's economies of scale
Migdal, controlled by Italy's Assicurazioni Generali SpA (BIT: GASI), is a tier-1 Israeli investment institution, with NIS 134 billion in assets under management through its insurance, pensions, provident funds, and financial services operations. Migdal manages part of this money for members of its pension funds, and part of the money through its nostro portfolio.
The linking up of Migdal, Israel's largest insurance company, with the expertise of AccelMed's managers can be partly explained by Migdal's economies of scale, which enables it to invest in assets that will generate returns that will justify the investment only after several years. Another reason is the company's need to diversify its investment channels to sectors not directly linked to the capital market.
Migdal has other investments in the life sciences, including in Exalenz Bioscience Ltd. (TASE:EXEN). (Arkin is also an investor in that company). It is Israel's foremost financial investor in the life sciences.
Published by Globes [online], Israel business news - www.globes-online.com - on September 15, 2011
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