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Israeli high-tech: six-year low in the number of exits in the first half of 2020

“Investment activity sends an optimistic message. The increased availability of capital for deployment, both in domestic and foreign funds, provides a solid foundation for growth,” according to the report

Israeli high tech
According to the IVC and the law firm Meitar report in the first half of 2020, there was the sharpest decline both in the number of deals (32%) and value (22%), compared to the corresponding period.

There were 52 exits in the Israeli High Tech – compared to 77 in the first half of 2019 with a total value of $14.3 billion in the first half of 2019.

The total value was $5.8 billion- compared to $7.47 billion in first half of 2019 (in deals of up to $5 billion.) – the lowest number in the last 6 years. with a total value of $14.3 billion in the first half of 2019

The number of exits in the Israeli High Tech in the first half of 2020 has reached a low but the average exit value is the highest in the last six years.

The report, published today (Wednesday), examined the state of exits brought along difficulties for Israeli high-tech exits in the wake of the outbreak of the coronavirus.

Key findings:
  • The average exit value in the first half of 2020 was $112 million, the highest in the first half of in the last 6 years
  • 3 exits of $1 billion or more
  • The number of exits between $100 million and $5 billion was lower than in 2019, with 9 deals in the first half of 2020 compared to 23 in the first half of 2019
  • The bright spot – investment value: In the first half of 2020, $5.2 billion were raised in 312 deals, an average of $16.8 million per investment. This is the highest figure in the first half of in the last 6 years
  •  The number of exits between $100 million and $5 billion was also lower than in the first half of 2019 – only 9 deals compared to 23 in first half of 2019.

However, the average deal value in the first half of 2020 rose to $112 million, the highest average value in the last six years –  excluding transactions of $5 billion or more. This figure was affected by three transactions of over $1 billion each.

In the first half of 2020, $5.2 billion were raised in 312 investment deals, an average of $16.8 million per investment, compared to $3.76 billion raised in 258 deals in the first half of 2019, averaging $14.5 million per deal. That is the highest investment value in first half of in the last six years.

According to the report 10 investment deals of over $100 million, the highest number of deals in this market segment in first half in the last six years.

The three IPOs took place in the first half of 2020 – Ayala Pharmaceuticals, SaverOne, and PolyPid. Michal Saam, Data Analyst at IVC explained “This was a relatively weak half year in terms of IPOs and Buyout deals, with 3 IPOs and a single Buyout deal – of Armis – compared to 8 deals in the first half of 2019. Last time we saw numbers of this magnitude in non-merger exit deals was in the first half of 2016.”

“On the optimistic side”, said Saam, “the second half began with two IPOs from PolyPid and Lemonade, with the latter leaving a significant mark for investors and quite unusual for Israeli companies on Wall Street. It is hoped that the issue of Lemonade will mark a new wave of Israeli offerings on Wall Street, and some of them may come to fruition as early as the second half of 2020.”

“We see the substantial effect of coronavirus pandemic bringing a significant decline in exits,” said Shira Azran, Partner at Meitar. “These results sit well with the general atmosphere among buyers that the focus should be on protecting market share and revenues and preserving cash, rather than deploying capital on M&A,”

“We will continue this downtrend in exits.” she added, “On the other hand, we see that in many companies the growth processes continued during the crisis as well. Specific sectors are flourishing and were given unprecedented ground for accelerated growth, such as digital health, fintech, and general digital services. That will hopefully be the basis for exits in future years. In addition, investment activity sends an optimistic message. The increased availability of capital for deployment, both in domestic and foreign funds, provides a solid foundation for growth, and we expect this trend to continue in the second half of 2020.”

 

 

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