The Innovation Authority has chosen institutions that will receive protection for investments in high-tech – the capital market


The Innovation Authority has chosen the institutional bodies that will receive protection for their investments in the high-tech field. The entities will actually invest NIS 2 billion in high-tech companies that are in the sales and growth stages and they will receive a state guarantee for 40% of the investment in the event of an investment failure, ie if their investment goes down the drain due to the collapse of the company in which they invested.

The choice of the institutions was determined by a tender method, with the entities that could submit bids being companies that manage provident funds, insurance and banks. In total, the institutional entities submitted bids with a total financial amount of NIS 3.25 billion, and after examining the bids, 10 entities were selected that would receive such protection, for 40% of investments of NIS 2 billion.

The entities that won the tender are: Clal Insurance, Mizrahi-Tefahot, Menora Mivtachim, Migdal, Psagot, Bank Leumi Capital Markets, Discount Capital, Phoenix, Poalim Capital Markets and Moore Investment House.

The winning entities will receive an approved investment framework in state protection at a rate of 40% of their investments. The investments will be made during the next 18 months in Israeli high-tech companies in the initial growth stages. The portfolio will be managed by the institutional investment body for a period of 8.5 years (18 months investment + 7 years maintenance).

The program in which the winners were determined today was jointly led by the Ministry of Finance, the Securities Authority and the Innovation Authority as part of an attempt to accelerate high-tech activity in Israel after the stagnation in investment in the industry since March (Corona virus outbreak). The latter has devoted many resources to training young people to engage in the field.

Institutional investors have long feared investing in high-tech fields due to the fear of the high rate of failure in investments in the field and of the fact that long-term savings returns will be erased and savers will be harmed. It was estimated that 40% protection of investment in the field is in fact the balance point that will allow institutionals on the one hand to absorb failed investments and on the other hand will be compensated by the protection of the state and successful investments.

The mix of winners is interesting and it is clear that the banking system that could provide generous credit to the industry or invest in it through nostro accounts and thus be exposed to it, preferred to access the state tender and receive state protection while private entities that won the tender are few and exclude insurance companies. The nostro accounts, the peaks and the moor.

The Minister of Finance, Israel Katz, said: “I welcome the connection of the Israeli capital market to investments in the thriving high-tech industry, while diversifying the public market industries and preserving the public of savers and insureds in Israel. This is an important step that will strengthen the position of the Israeli high-tech industry worldwide. The move will lead to the prosperity of high-tech companies in Israel, along with a promise to keep the money of employees, insured and pension savers in the Israeli public. I will continue to work for the saving public in Israel and ensure correct and considered investments from the savers’ money, both routinely and in times of crisis. All this along with a constant concern for the resilience of the Israeli capital market both in the immediate and long term. This is a significant step that will accelerate the Israeli digital economy. I see the high-tech industry as a leading growth locomotive in the Israeli economy, and I will ensure that in the field of professional training that I am promoting these days, many unemployed people will be directed to this industry. ”

Ami Applebaum, Chief Scientist at the Ministry of Economy and Industry and Chairman of the Innovation Authority: “We believe that this move will mark the beginning of a structural change in the Israeli capital market to specialize in technology investment, which will accelerate the Israeli economy towards high-tech and digital economy. Building expertise in investing in technology at institutional investment bodies A significant increase in their investments in technology will give tremendous impetus to the growth of companies in Israel and accelerate the transition of the financial sector and the Israeli economy to a more digital and established future for emerging technology companies. ”

Moshe Barkat, Head of the Capital Market:As part of the program we have created, the Capital Market Authority precedent-settingly supports institutional financial investments in Israeli high-tech when they are made in a balanced and measured manner for the benefit of savers and while preserving their money. Accordingly, we demanded to give 40% protection to savers, even though we were pressured to give a lower protection rate. We also insisted that the rate of unprotected investors be raised to about 35%. In addition, the Capital Market Authority acted to ensure that the target companies were sufficiently mature for investment and insisted on introducing companies in advanced rounds of recruitment only. I am convinced of the success of the program under these conditions. It will contribute to pension savers, the promotion of high-tech and the growth of the Israeli economy. The fact that a significant part of the allocation goes to the banks and not to the pension savers, will lead the authority to demand that the outline be expanded so that NIS 2 billion will go to the pension savers and not to the banks. ”

Anat Guetta, Chairman of the Securities Authority: “Connecting the capital market to high-tech is a strategic goal of the Authority out of a desire to share the Israeli high-tech investors with the success of Israeli high-tech and to diversify the public market industries in a way that gives due weight to the industry in Israel’s economy.” We are beginning to see a number of processes that we have led, bearing fruit that herald the beginning of change – we have received dozens of prospectuses from high-tech companies and research and development partnerships. Israeli capital for the third millennium. ”

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