Written by Yoram Ettinger
Nov. 2, 2008
Jerusalem Boardroom #130,
Right Side News has received the following report from Yoram Ettinger and the excellent results from an attractive business climate and conservative fiscal policy. If only our own representatives in Washington, D.C. would be good stewards of the tax-payer's monies instead of lining their own pockets with special interests, pork barrel earmarks and un-restrained government programs. Right Side News commmends Israel's finance sector, high tech industry (attracting investments) and the attractive business climate they have established by implementing declining tax rates. They have no Fannie Mae or Freddie Mac.
1. Israel constitutes an attractive post-meltdown market. So far - in spite of its reliance on export and overseas investments - Israel has remained a relative island in a global economic meltdown, due to its fiscally-responsible policies:
*Israel's banking system has been relatively-responsible, scrutinizing loans and mortgages (e.g. lucky home owners receive 60%-70% mortgage).
*No real estate bubble.
*Israel's budget deficit has been minimal in recent years - 1.2% and 1% of GDP in 2006 and 2007 respectively.
*Inflation has been under control since the 400%+ rates of the 1980s: 2.5% in 2005, -0.1% in 2006 and 3.4% in 2007 (largely due to rise of price of commodities and oil, which has recently subsided).
*Interest rate (currently 3.75%) has been around 4%.
*Government expenditures/GDP ratio has declined to lowest level since late 1960s - 44.9%.
*Debt/GDP ratio has been shrinking from 95% in 2005 to 80.6% in 2007.
*Declining tax rates.
*Solid Shekel - currently 3.7 per $, 3.5 during 2007, 4.3 in 2006.
2. Israel constitutes an attractive post-meltdown market, due to the aforementioned fundamentals, in addition to its unique high tech industries, which are top heavy on cutting-edge engineering and tangible technologies/products and low on dot.com companies. While the scope of overseas investment, in Israel, has declined substantially, due to the meltdown on the investors' side, the flow of investment by astute investors persists. They invest in lower market valuations, expecting attractive "Exits" during global economic recovery.
3. Oracle has acquired Israel's Primavera (550 employees), which is Oracle's 2nd R&D center in Israel. The first one was acquired in 2006 (Globes, Oct. 20). The Swiss giant Von Roll has acquired 80% of Israel's Enerco for $75MN (Globes, Sept. 17). The New Jersey-based Phibro Animal Health, a global leader in medicated additive feed, acquired Israel's Avik for $47MN. Phibro operates two plants in Israel (Globes, Oct. 17, 2008).
4. GE Pension Fund, IBM and Caisse de Depot et Placement du Quebec have been among the investors in Israel's Genesis VC's 4 funds. Genesis has recently completed its $100MN 4th fund (Globes Business Daily, Oct. 23).
5. Greylock Partners raised additional $50MN to their current ($150MN) Israel-dedicated fund (Globes, Oct. 8).
6. Morgan Stanley, Cisco and Europe's Index Ventures co-led a $63MN 4th round by Israel's Optier (Globes, Sept. 24). Japan's Pacific Technology Fund led a $20MN 3rd round of private placement by Israel's Altair (Globes, Sept. 23). Spark Capital and Red Point co-led a $13MN 2nd round by Israel's AdaptTV (Globes, Sept. 24). Canada's Blackberry Partners launched its initial three investments, one of them in Israel's WorldMate - leading an $8MN round of private placement (Globes, Oct. 30). Silicon Valley Bank has extended an $8MN credit to Israel's Mintera (Globes, Oct. 20). River Cities Capital and Early Stage Partners led a $7MN round by Israel's Simbionix (Globes, Oct. 20). Britain's GP Bullhound Sidecar and dotCorp Assets Management invested $5MN in Israel's MyThings (Globes, Oct. 16). Bessemer and Mangrove invested $3.5MN in Israel's Wix (Globes, Oct. 16).