Fortissimo buys MGAR group for NIS 240m

Yuval Cohen

The MGAR group is a major provider of services to municipalities in Israel, with parking payment app Cellopark among its companies.

Sources inform "Globes" that, two weeks ago, private equity firm Fortissimo, headed by Yuval Cohen, completed the acquisition of the MGAR group from ATE, which belongs to the heirs of Dan David and its founder Eliyahu Houri, for NIS 240 million. "Globes" reported the negotiations on the deal a few months ago.

MGAR provides municipal services, such as tax collection and data services, to local authorities around Israel. Fortissimo's interest in the group mainly stems, however, from the technological side of its business: subsidiaries Cellopark, which has developed an app for paying at parking lots via smartphone, and Prioricity, which provides designated ERP (enterprise resource planning) systems to the municipal sector.

Cellopark operates in Israel and in other countries (according to its website it is active in Australia, Argentina and Europe, and it has plans for expansion to other places), but in Israel it has a market share of 15%, a long way behind its main competitor, Pango. A deal for the purchase of shares in Pango in early November this year valued it at NIS 550 million.

Prioricity was set up by MGAR together with Priority Software, which is a portfolio company of Fortissimo. It was this connection that led to Fortissimo buying MGAR.

Until the sale, MGAR was controlled by ATE, a company registered in the Netherlands, and owned by the Dan David Foundation, with 60% of the shares. Founder Eliyahu Houri owned 40%.

MGAR was founded in 1990, and according to its website it is the leading provider of services to municipalities in Israel. The group brings together companies in a range of areas, and its customers include local authorities, water companies, government ministries, and commercial companies. In 2008, ATE and Houri bought out their partner in MGAR, Shikun & Binui Holdings Ltd. (TASE: SKBN), for NIS 30 million at a valuation of just NIS 80 million, so the sale to Fortissimo represents a profitable exit.

Fortissimo Capital, founded in 2004, is one of the leading private equity firms in Israel. It has raised $1.6 billion in five funds. It completed the raising of the fifth fund, amounting to $650 million, in February this year. Among its successful exits are Sodastream, Nur Macroprinters, Kornit Digital, Starhome, Cadent, and Dip-Tech.

Published by Globes, Israel business news - en.globes.co.il - on December 27, 2020

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