Leumi to invest $50m in Viola Group

Bank Leumi's investment arm Leumi Partners is in advanced talks to invest $50 million in the high-tech investment fund.

Bank Leumi (TASE: LUMI), through its investment arm, Leumi Partners, is in advanced talks to invest $50 million in three funds of Viola Group, founded by Shlomo Dovrat and others. Viola Group is reportedly raising more than $500 million for its three funds, which mainly invest in technology companies. The fundraising is due to close in the first half of 2014.

Israel Discount Bank (TASE: DSCT) and Harel Insurance Investments and Financial Services Ltd. (TASE: HARL) are also interested in investing in Viola Group, but have not yet decided whether to do so, or if so, how much.

Bank Leumi is expected to be a major investor in the funds. For the bank, an investment in a fund has added value - a big foothold in high tech. Israel's banks have little presence in high tech, considered Israel's growth engine, because of its high risk and the extensive know-how needed for financing. The bank wants to become the leading bank in high tech, and is therefore initially investing in Viola Group with the goal of acquiring know-how and expertise.

Bank Leumi is also leading the investment in the fund that former NICE Systems Ltd. (Nasdaq: NICE; TASE: NICE) CEO Haim Shani and former Microsoft Israel R&D president Moshe Lichtman are setting up. In the past year, the two men have been trying to establish the fund, which will mainly invest in late-stage start-ups that already have tens of millions of dollars in annual turnover. The fundraising will reportedly close within two months.

Policy change

Viola Group, which was founded 14 years ago, has three funds: Viola Capital (formerly Plenus Venture Lending), which has more than $320 million in assets under management, and extends credit to high tech companies and manufacturers; Viola Private Equity, which invests in companies, especially in high tech, with global activity; and Carmel Ventures, founded in 2000, which invests in start-ups. Leumi Partners will reportedly make the biggest investment in Viola Capital.

Investment was once a major activity of Bank Leumi. It made large investments in Israel Corporation (TASE: ILCO), Migdal Insurance and Financial Holdings Ltd. (TASE: MGDL), Paz Oil Company Ltd. (TASE:PZOL), Africa-Israel Investments Ltd. (TASE:AFIL), and Super Pharm Israel Ltd. The bank changed its investment policy several years ago, partly at the order of the Bank of Israel to make large capital provisions for these investments. The bank still has investments in non-financial companies, the largest of which is its 18% stake in Israel Corp., but it is reducing its direct exposure in companies, while increasing its investment in funds, such as those of Viola Group.

Published by Globes [online], Israel business news - www.globes-online.com - on July 29, 2013

© Copyright of Globes Publisher Itonut (1983) Ltd. 2013

Twitter Facebook Linkedin RSS Newsletters גלובס Israel Business Conference 2018