Israel approved today a plan to provide state guarantee for equity invested by institutional investors in high-tech companies in late-stage funding rounds.
The program is a central element of a broader financial plan to help the business sector cope with the financial crisis amid coronavirus pandemic.
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An institution that is approved for the program will be eligible for protection of 40% on its nominal investments in the high-tech industry in the event that its portfolio depreciates.
Should the value increase, the institutional investor will transfer 10% of the difference between the return on the portfolio and the return on the government bonds yield for the comparable period to the Innovation Authority, taking into consideration transaction and management expenses.
The portfolio must be managed by the investor for a period of 8.5 years (18 investment months + 7 holding years), similar to industry practices. The guarantee will be provided to portfolio investments made during the first 18 months of the program. The Economy Ministry expects the high tech industry to gain a $570 million ( NIS 2 billion) boost.
Aharon Aharon, CEO of the Israel Innovation Authority: “The collaboration between the Innovation Authority, the Capital Market Authority, the Securities Authority, and the Ministry of Finance, will expedite the specialization of the Israeli capital market in technology sector investments, and will play a significant role in the growth of Israeli high-tech, bringing the Israeli capital market into the next technological era.”
