Show us one respectable international investment house without a representative office or contact person in Israel to seek out interesting business opportunities here. There is almost no such thing. All investment houses, large and small alike, talk about "commitment" to Israel, with its leading technologies and interesting companies. In other words, opportunities to make money.
Some investment houses maintain impressive operations in Israel, managed by bankers who have resided here for years, such as Citigroup (NYSE:C), CIBC (NYSE:BCM; TSX:CM), Lehman Brothers (NYSE:LEH), Merrill Lynch & Co. (NYSE:MER), and UBS (NYSE; SWX:UBS). Others keep a team in Israel that they are planning to expand, such as CE Unterberg Towbin. Then there are investment banks that were active in Israel in the past, closed down their operations, and are coming back, such as Goldman Sachs (NYSE:GS). Others are entering Israel via joint representation with Israeli investment houses, such as the joint venture between William Blair & Co. and Poalim Capital Markets - Investment Bank Ltd. or Jeffries Broadview and Leumi & Co. There are also those who picked a strategic partner that are none of the above. Thomas Weisel Partners entered Israel via an investment services group established a few months ago, Magnolia Capital Partners, is one example.
A partner in M-Systems' issue
Thomas Weisel Partners wants a share of the Israeli market. The investment bank's managers, bankers, and analysts already shuttle back and forth regularly. Two groups from the bank are now in Israel, one for semiconductors, and the other for health and life sciences. The bankers are due to meet with over 30 Israeli companies and quite a few venture capital funds.
Thomas Weisel Partners is not a well-known name in Israel. It is a young investment bank, only six years old. A few years ago, Thomas Weisel Partners chairman and CEO Thomas Weisel sold Montgomery Securities to Bank of America (NYSE:BAC) for $1.2 billion, and went to found his eponymous investment house. Thomas Weisel Partners financed 96 deals, mergers and acquisitions in 2004, amounting to $13 billion, and underwrote the largest number of technology companies that year.
San Francisco-based Thomas Weisel Partners has 550 employees, and has completed 517 transactions worth an aggregate $170.4 billion since it was founded. The bank's main source of financing is California Employees’ Retirement System's (CalPERS) and Nomura Holdings Inc. (TSE:8604; NYSE:NMR), Thomas Weisel's partner in the Far East.
Thomas Weisel Partners' activities in Israel are limited. In the past 12 months, it was involved in a convertible bond issue by M-Systems Flash Disk Pioneers Ltd. (Nasdaq:FLSH) and the IPO by Syneron Medical Ltd. (Nasdaq:ELOS).
Hagi Schwartz and Rani Cohen co-founded Magnolia Capital Partners. Cohen was previously a manager at Mofet Technology Fund Management Ltd. (TASE:MOFT) and SBC-Aurum, and a banker at Credit Suisse Group (SWX:CSGN). Schwartz is already well known. In the 1990s, he was CFO of Check Point Software Technologies Ltd. (Nasdaq:CHKP) and Mercury Interactive Corporation (Nasdaq:MERQ), and most recently was CFO for start-ups Atrica Inc. and HyperRoll Inc..
"We hope that Israel's contribution to the bank's revenue will grow," said Thomas Weisel Partners principal Mark Quinlan, now visiting Israel. "It could be said that we hope that within the next 12 months, we'll be involved with a larger number of deals."
This is Quinlan's second visit to Israel. His last visit in early 2004 was in connection with M-Systems' bond issue. On that visit, Quinlan, an expert in semiconductors, met with 15 companies (two of them public), and seven venture capital funds. "It's important for us to find a way to serve the market. Rani brings the know-how concerning venture capital funds, and Hagi helps companies prepare for issues. The combination of the two men is the right partnership for us. They're entrepreneurs, and we at Thomas Weisel consider ourselves entrepreneurs, too, since the bank is a private partnership.
"In general, there are about 12 semiconductor companies in Israel and North America expected to hold IPOs. The revival in IPOs by semiconductor companies began in September 2003, with the successful issue by SigmaTel Inc. (Nasdaq:SGTL). Since then, 15 semiconductor companies have floated on Nasdaq, including Chinese company Foundry Networks Inc. (Nasdaq:FDRY). We're now seeing a revival in the second half of 2005 alone, and there will be even more issues. In any case, we believe that these 12 companies will hold issues in the next 12 months."
Published by Globes [online], Israel business news - www.globes.co.il - on May 26, 2005