Bank Hapoalim (TASE: POLI) is setting up a NIS 80 million fund that will invest in financial technology, or fin-tech, companies over the next 3-5 years.
"This fund will turn Bank Hapoalim into a home for technology companies that are developing products for the financial industry," says Bank Hapoalim chairman Yair Seroussi, adding, "The willingness of Israel's financial industry, led by the banks, to adopt and promote technological innovations helps the development of fin-tech. Bank Hapoalim will encourage innovative technology enterprises in the financial industry."
Poalim Capital Markets - Investment Bank Ltd. CEO Amir Aviv will be responsible for the venture's equity investments. Bank Hapoalim Head of Corporate Strategy Ari Pinto and Head of Information Technology Zvi Naggan, a former Amdocs Ltd. (NYSE: DOX) executive, will oversee the venture for the bank. Equity investments will depend on an assessment by Poalim Capital Markets on an investment's financial potential.
The bank plans to appoint to the companies' boards of directors bank officers with expertise in the field to help their business and technological development.
The bank's new fund will focus on early-stage investments in companies in which venture capital funds have already invested in, or in conjunction with them. The bank believes that it will make investments of $2-3 million in 15-20 companies in various stages of development. The investments will be for periods of 7-10 years.
Bank Hapoalim has identified 100 companies developing products, such as infrastructure management, cloud computing, storage, and information security for financial institutions' core operations. The bank expects to make a return on equity of 25% on its equity investments in companies, the prevailing return in the venture capital industry. The bank does not expect a direct return on investments in companies whose technologies it anticipates using.
Bank Hapoalim will advise the companies during their product development stage on both the business and technological and implementation side. A joint team from the bank's IT, business strategy, and relevant business units and Poalim Capital Markets will review companies that are developing products of interest to the bank. The companies picked will be able to develop and test their products on the bank's systems.
Later, Bank Hapoalim will let the companies test their products on the bank's systems for end users. If programmers or developers from the bank's IT Division are needed for active support, such as product integration with the bank's systems or assistance at points of development, the investment will come from the bank's IT budget.
Published by Globes [online], Israel business news - www.globes-online.com - on February 21, 2012
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