Israeli institutional investors exposed to SVB

SVB Tel Aviv branch credit: Cadya Levy
SVB Tel Aviv branch credit: Cadya Levy

Israeli institutional investors including Harel and Migdal have hundreds of millions of dollars invested in funds associated with SVB.

The collapse of Silicon Valley Bank (SVB) has raised immediate concerns about the impact on Israeli institutional investors. In recent years they have been transferring more and more investments overseas in order to increase returns for savers, as the amount of assets under management has been growing.

At present no Israeli institutional investors hold SVB shares directly. Psagot held a modest $234,000 worth of shares as of the end of the third quarter of 2022 in its mutual fund but that stake was sold three weeks ago.

However, according to SmartBull, a platform which analyzes institutional investments, Israeli institutional investors have invested hundreds of millions of dollars in the bank's investment funds, in venture capital funds and tech companies from Israel that managed funds in it, and here the question arises as to how those investments will be affected by its collapse. In any case, the savings market estimates that the impact of the collapse of SVB on the pension savings of the public in Israel will be marginal, if at all.

Investment of hundreds of millions of dollars

Two Israeli institutional investors, which in recent years have sought to increase their exposure to the growing tech sector have invested hundreds of millions of dollars in investment funds managed by SVB.

Migdal Group (TASE: MGDL) has investments in the SVB Capital venture capital fund amounting to $213 million and investment commitments amounting to an additional $41 million.

Harel Group (TASE: HARL) invested $18 million in SVB Capital and a further $28 million in SVB Innovation venture debt fund, which provides loans to startups against surety. Harel has also committed to investing a further $107 million in the fund.

Migdal said, "Migdal Insurance Company is not exposed to SVB but is invested in fund management activities managed by the bank. The venture capital funds in which Migdal invests are a separate legal entity and are managed separately by a sister company of the bank. These funds are not a party to the proceedings with the bank. Migdal will continue to closely monitor the events and their consequences, as far as they are relevant."

Harel said, "Harel is not exposed to the bank but to debt funds managed by a subsidiary of the bank, which is a separate legal entity. Harel's investments are not affected by the state of the bank but by the state of the companies to which the loans were given. The funds are very dispersed and the loans are managed at a high professional level and are backed by sureties."

VC funds that were or are still customers of the bank

At the same time, Israeli institutional investors have investments in venture capital funds that were or are still SVB customers. For example, in Magma Venture Partners, Israeli institutions have invested about $150 million, as of the end of the third quarter of 2022.

Israeli institutional investors have an even bigger investment of $240 million in Zeev Ventures venture capital fund, with a commitment for $28 million more.

Phoenix Holdings (TASE: PHOE) has a $4 million investment in Elie Wurtman's Pico Ventures with a commitment for $13.5 million more.

In addition, there are direct investments by institutional investors in the shares of several tech companies with money in SVB, some of which was successfully withdrawn and transferred elsewhere including to Israeli banks. These institutional investments total about $60 million, with Phoenix alone holding shares worth $26 million at the end of the third quarter of 2022.

For example, the institutions held about $40 million dollars in the Similarweb (Nasdaq: SMWB), with Phoenix holding about $18 million at the end of the third quarter of 2022. More and Migdal each held more than $9 million. Israel institutional investors held about $17.5 million in Innovid (NYSE: CTV), with Phoenix the largest investor with almost half of the amount, while Harel and Migdal each have an investment of a few million dollars in Innovid.

Published by Globes, Israel business news - - on March 12, 2023.

© Copyright of Globes Publisher Itonut (1983) Ltd., 2023.

SVB Tel Aviv branch credit: Cadya Levy
SVB Tel Aviv branch credit: Cadya Levy
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