“Globes” has learned that Israeli software company Tescom is considering a $15-20 million financing round from European venture capital funds and investment banks. Tescom develops software testing and quality control applications.
Tescom president Ofer Albek confirmed the report, saying that Tescom has already received a number of interesting offers and is considering accepting the money, even though the company is a profit-making concern. He said the financing round is intended to support the company’s rapid growth rate. Potential investors recently estimated Tescom’s company value at $170-200 million, although one investor told “Globes” today that a lower value is being discussed at this stage.
Albek claims that negotiations to inject capital into the company have been proceeding for some time. Six months ago, investors discussed a possible investment at a company value of $500 million. He said one of the main reasons for the investors’ approach was the current difficulties in finding growing profitable high-tech companies that reduce the investment risk. Regarding a public issue, Albek said, “Tescom is a company ripe for issuing on a stock exchange, but a public issue will be considered the moment the stock market recovers.”
Tescom posted a profit on $45 million in revenues in 2000, and forecasts $60 million revenue this year. However, Tescom sales are through customer credit, and the banks are unwilling to provide 100% coverage of the customer credit, demanding a guarantee of a share of Tescom’s equity.
Tescom was founded four years ago, and has raised $10 million to date from the Apax Partners, Genesis Partners Funds, Israel Growth Fund and Green, which acquired some of Genesis’s and Apax’s shares when they realized part of their investment. Tescom has a staff of 700, half of whom are employed in Israel and the remainder throughout the world.
Published by Israel's Business Arena on 13 March 2001