Portofino Investments served as the exclusive Advisor in a stock allocation transaction between ORC and “Poalim Equity” – Bank Hapoalim’s investment arm. Following a previous
Recently, cracks in the US financial system have been exposed, with thousands of small and medium-sized banks facing risks. Initially, a small crisis at a local bank in California was reported, but within days, it pushed the world's largest central banks to cooperate and provide liquidity to the financial system. The move came after the Swiss Central Bank provided a safety net of $110 billion to prevent the collapse of Credit Suisse, which could have led to a major upheaval in the global financial markets.
To tackle the crisis, the Fed introduced a new program to help banks called the Bank Term Funding Program (BTFP), which guaranteed all banks and financial institutions in the United States the possibility to receive loans from the Fed against approved assets. The loans were given for a period of one year and with an interest rate of about 4.2%. The program was immediately in demand, and in just two weeks, the Fed's balance sheet increased by $391 billion, erasing all the reductions made since October 2022.
The capital and collateral crisis of the banks, initially perceived as a small, local issue, is spreading. According to data from the Federal Deposit Insurance Corporation (FDIC), all US banks together have unrealized losses of about $620 billion on bonds, and the American banking system has a deficit of $2.2 trillion on the value of its assets, compared to the value recorded in the books, according to researchers from Columbia University.
The risks are significant, as even if only half of the depositors not insured by the FDIC, who hold about $9 trillion, were to withdraw their money, 190 banks would have collapsed. If 100% of the uninsured deposits were withdrawn, more than 1,600 banks would collapse, including very large banks.
The financial crisis of 2008 revealed the fragility of the US banking system, and the current situation suggests that more work is needed to ensure its stability. While the central banks have taken measures to address the crisis, the risks and challenges faced by the US banking system are significant and should not be underestimated.
By Martijn Peters
President of Globalscope,
Founder of DEX international M&A
Cross-border M&A fell to $1.57 trillion worldwide in 2022, down from an all-time high of $1.7 trillion in 2021, according to Pitchbook, a financial database. The number of international deals actually dropped to 9156, a total decline of 11%.
But from a broader perspective, it’s not particularly bad news. As a comparative trend, cross-border M&A transactions are still higher than they have been historically, in spite of the more recent—and potentially temporary—slowdown.
Current economic and political challenges have created a combination of factors that have fueled uncertainty, caution, and a bit of a “wait until the storm passes” attitude in the minds of buyers, sellers, and financial lenders worldwide.
Three trends particularly stand out:
1. Steadily increasing interest rates, combined with decreased availability of debt in certain regions, had an overall tempering effect on dealmaking last year, and to some extent, it still does in 2023.
2. Geopolitical events, most significantly the war in Ukraine, took a measurable toll on international transactions—and confidence.
3. Concerns about the impact of inflation worldwide add even more fear and hesitancy when it comes to cross-border M&A decisions.
Long-term growth in cross-border M&A is driven by two major buyer groups: 1. Large corporations who continue to expand their businesses into foreign territories and find that M&A is a faster and more certain way to gain access to new markets, rather than going “greenfield”. 2. Private equity firms also increasingly deploy international buy-and-build strategies to accelerate the value creation process, especially after having acquired a first-platform company in a given industry. PE firms have learned that breaking into new markets and turning a national leader into an international player has a directly positive effect on valuation levels when selling the company.
This is not to say, however, that everything is rosy in the international M&A arena, nor is it by any means simple. International mergers and acquisitions are driven by various factors, like reducing competition, penetrating new markets, diversifying product lines or services, and gaining rights to intellectual property such as patents, trademarks, and copyrights. As a result, international M&A often follows trade. Most cross-border transactions take place between countries that do a lot of business with each other. And from a mid-market perspective, I estimate roughly 1/3 of M&A transactions are cross-border in the sense that the buyer and seller come from different countries. This number is typically higher in smaller countries like The Netherlands that are more accustomed to working internationally than their larger counterparts, such as the United States. Manufacturing, consumer, and professional services have historically been sectors with high volumes of cross-border M&A, but during the last decade, technology, media, and telecom (TMT) have shown the largest increase in the number of deals and value. The bottom line is that cross-border M&A adds further challenges to the already complex process that characterizes dealmaking. Cross-border transactions bring additional risk and complexity due to differences in cultural, political, economic environment, law, tax rules, and accounting, not to mention disparities in corporate culture itself. But there is another bottom line to also consider. International M&A can offer a level of financial rewards and business growth that cannot be achieved by regional or national deals alone. More and more, M&A opportunities for mid-market companies are becoming increasingly international. Cross-border M&A growth is good news for mid-market buyers and sellers who are looking for more strategic deals, increased market share, and worldwide expansion and growth. # # # Martijn Peters is Founder and Managing Director of DEX international M&A, a Netherlands-based company specializing in structuring and managing M&A transactions. He has broad experience as an international deal maker and currently serves as President of Globalscope Partners.
Thermopatch Corporation (“Thermopatch”) (www.thermopatch.com) is a global leader specializing in labeling, embellishments, and transfers for textiles
primarily to the industrial laundry, workwear, hospitality, and sports markets. For over 80 years, Thermopatch has positioned itself as a premier player in the development, innovation, and manufacturing of garment branding and labeling solutions. The Company sells its products worldwide with manufacturing and sales locations in the US, Netherlands, United Kingdom, Poland, France, Germany, Canada, and China.
The buyer, Avery Dennison Corporation (NYSE:AVY) (“Avery Dennison”) (www.averydennison.com), is a global materials science company specializing in the design and manufacture of a wide variety of labeling and functional materials. The company’s products, which are used in nearly every major industry, include pressure-sensitive materials for labels and graphic applications; tapes and other bonding solutions for industrial, medical, and retail applications; tags, labels, and embellishments for apparel, as well as radio frequency identification (RFID) solutions serving retail apparel and other markets. The company employs approximately 36,000 employees in more than 50 countries.
As a result of this acquisition, Thermopatch will become part of the Avery Dennison’s Retail Branding and Information Solutions (RBIS) Apparel Solutions division. The acquisition will allow the combined business to build on collective industry knowledge, leveraging the company's know-how, quality, and service to drive growth in external embellishments.
The US member, Paramax from GlobalSCope served as the exclusive M&A advisor to Thermopatch on this transaction. Paramax has extensive experience advising manufacturers in the labeling and printing & packaging markets, serving a variety of end markets, with a track record of highly successful outcomes at premium valuations. Paramax Corporation is a FINRA-registered investment banking firm focused on M&A transaction advisory services.
For more information, please contact the Paramax deal team.
Hitachi Industrial Equipment Systems Co. announced that it has acquired 100% of the shares in Photon Energy GmbH from the three founding shareholders and Bayerische Beteiligungsgesellschaft mbH.
For more than 40 years, Hitachi Industrial Equipment Systems has successfully developed its coding and marking business with continuous inkjet printing technology, to serve a variety of product identification needs in food & beverage, cosmetics, pharmaceutical, electronic and automotive parts industries in well over 110 countries worldwide.
Increasing demand for precise, indelible coding and environmentally friendly products expands the business opportunities for a wider range of coding technology in particular laser markers.
Photon Energy, since its foundation in 2010, has established its reputation as technology leader in the development, research and sales of ultra-short pulse (USP) laser, sources and marking systems. Their strengths are in the fields of medical devices, electronics and semiconductor industries primarily in Europe but with plans to further expand its sales in Asia and North America.
Hitachi Industrial Equipment Systems’ goal in this acquisition is to add Photon Energy’s innovative core laser technology and application know-how to its industrial equipment portfolio. By doing so, Hitachi will strengthen its competitiveness in the coding and marking field by merging its strengths with Photon Energy’s superior laser technology expertise.
Yasuhiro Takeuchi, President and Director at Hitachi Industrial Equipment Systems, said: “I am very pleased to announce that Hitachi has acquired Photon Energy. Photon Energy’s excellent technologies will help Hitachi to gain access to wider segments and accelerate growth in the coding and marking business in global market.”
Dr Hans Amler, CEO of Photon Energy GmbH, said: “We are very excited to challenge further growth of our business in the global market as a member of the Hitachi family.”
Carlsquare acted as the exclusive financial advisor to Photon Energy GmbH and supported the management and shareholders in identifying the ideal partner during a structured global screening process, including marketing materials preparation, due diligence process coordination, and transaction negotiations.
Dynamic Technologies, a designer of media-based attractions and ride systems for the global theme park industry and other entertainment destinations, has operations in Canada, the U.S., and China, but sells its products around the world.
Its Parr subsidiary, which was founded in 1975, is a custom metal fabricator serving the pulp and paper, mining, and food industries.
It also provides a variety of fabrication to the construction and truck trailer repair sectors.
After Dynamic Technologies decided to focus solely on its core business, it engaged Osprey Capital and Hawkbridge to sell Parr through a highly competitive process to a specific group of strategic and financial buyers. The intent was to maximize the return for Parr.
Osprey Capital delivered the pool of potential suitors and the auction generated the highest possible sale price for Parr.
Dynamic Machine was ultimately selected as the ideal suitor largely due to its stellar reputation as a metal fabricator. Parr is an accretive acquisition for Dynamic Machine and its 40-year legacy of exemplary customer service will continue under its new corporate umbrella.
Portofino Investments served as the exclusive Advisor in a stock allocation transaction between ORC and "Poalim Equity" – Bank Hapoalim's investment arm. Following a previous transaction between the parties, also led by Portofino Investments, where Poalim Equity invested in Reem Holdings, a subsidiary of ORC and a leading income-producing Real Estate company, the current transaction includes a stock swap, in which Poalim became a partner in ORC and positioned ORC as the dominant stakeholder in Reem. The transaction was designed by Portofino in order to facilitate Poalim's strategic decision to expand its exposure to ORC, which holds additional assets and know how and is considered to be one of the leading firms in its sector in Israel.
ORC specializes in several activities:
Planning and building of hotel projects in Israel and worldwide. Currently, ORC is planning, developing, and marketing ~16,000 residential units and ~1,000 hotel rooms (most along the Tel Aviv coastline), as well as managing office and commerce spaces.
Among ORC's partners are some of the leading investment entities and Real Estate firms in Israel including, Poalim Equity – Bank Hapoalim's Investment arm, Leumi Partners – Bank Leumi's Investment arm, Jordache Group and Israel Canada.
Poalim Equity is the investment arm of Bank Hapoalim, currently the largest bank in Israel. Since its founding in 1921, Bank Hapoalim which is also Israel’s leading financial institution, played a pivotal role in the rapid growth of Israel’s economy. The bank operates in Israel and abroad in all areas of banking services and its associated activities in the capital markets. Poalim Equity invests across various sectors, geographies and strategies, in addition to providing a wide range of advisory services to private client companies and public ones.
Following the acquisition, “Howden-Wise”, which operates in the pension insurance sector will merge with Napa. This will make Howden Israel a unique one-stop-shop that will offer, for the first time in Israel, a comprehensive range of insurance, and financial products for companies and their employees domestically and internationally, by a global insurance broker.
The chairman of Howden Israel and CEO of Howden Europe, Mr. Danny Sever, congratulated the deal, stating: "We are thrilled to strengthen the dominance of Howden Israel in the local insurance market, by entering into the high-quality Employee Benefits business. The acquisition reflects Howden's strategy to become the dominant insurance broker in every country it operates in, and will enable Howden Israel to become the first international insurance broker in Israel, providing holistic insurance services to our extensive and loyal customer base."
Since its inception in 2000, Napa has been providing a unique One-Stop-Shop solution for “EBM”, Employee Benefits Management. Napa offers a full range of services in the fields of pension, long-term savings, compensation & benefits, health insurance, tax refunds, mortgage advisory, and more. In order to ensure employers comply with regulations, Napa also provides comprehensive in-house end-to-end services, including trust accounts, pension processing, healthcare insurance plans, and risk insurance plans.
Howden Israel, part of Howden Group, is one of the top three insurance brokers in Israel. Howden has been providing comprehensive solutions to clients in Israel since 2003, offering bespoke insurance policies and dedicated claims handling expertise, serving hundreds of businesses in Israel and around the world across a wide range of industries.
As part of a global group, Howden enjoys direct access to thousands of expert broker colleagues and partners around the world. Howden maintains an on-the-ground presence in over 90 territories and works in almost every market in the world.
Portofino Investments advised Netanel group in the process of company spin-off and the split between two of its core business units, which will continue to operate as two separate publicly traded companies. The process included advisory services concerning: shareholder management, dialogue with debtors in preparation for voting meetings, as well as concerning regulatory organs such as ISA, TASE, Israel tax authorities, and more. The split of a publicly traded firm, ending in two traded separate firms is considered unique in the Israeli market and was previously performed only a number of times.
The Netanel Group is one of Israel's leading real estate groups, with over 55 years of experience. The veteran group demonstrated financial robustness and conservative risk management throughout its decades of activity, which allowed it to safely navigate the changing markets and times while maintaining one of the highest quality standards in the country.
29/07/2022
Portofino served as the exclusive investment banker in the acquisition of Zilumatic Ltd. By MalamTeam Ltd. – a publicly traded company and market leader in the Israeli IT sector. Zilumatic specializes in the marketing and distributionof printing products and solutions, as well as providing service and IT support for printing and computing needs. The acquisition of 100% of Zilumatic shares will allow MalamTeam to leverage the synergies between the two business and expand Zilumatic operations, creating one of the largest distributors in the printing segment in Israel.
MalamTeam, which is one of the largest and leading IT groups in Israel, provides a wide range of computer services on the field of information technology. The group combines innovation with decades of experience in setting-up, implementing and integrating IT systems. It has more than 3,400 experts in a variety of IT proficiencies which are deployed throughout Israel, at the company's facilities as well as at its prominent clientele's locations. MalamTeam offers its integrated solutions for all types of hardware, software, database and communications platforms, and each of its business units specializes in its distinctive area.
Zilumatic is one of the leading companies in Israel for advanced office automation services. The company has a wide range of products including: computers, printers, photocopiers, fax machines, TV and computer screens and sound systems, and other digital equipment. Zilumatic represents in Israel some of the world's leading brands in the field such as Xerox, Sharp and Panasonic, exclusively enjoying the different channels which include the sale, rental and operational leasing of their wide product portfolios.
Portofino served as the exclusive investment banker in the sale of minority stake (20%) in Reem Group at a company valuation of USD 250 Million, to the investment arm of Bank Hapoalim. The transaction included a complex process of restructuring while merging several assets and entities held by the various shareholders under one entity. Managed by Portofino, the transaction included a significant process which involved multiple steps in light of the complex structure, which dictated the examination of different aspects of regulation, value allocation and taxation as well as shareholder management...
Poalim Equity is the investment arm of Bank Hapoalim, currently the largest bank in Israel. Since its founding in 1921, Bank Hapoalim which is also Israel's leading financial institution, played a pivotal role in the rapid growth of Israel's economy. The bank operates in Israel and abroad in all areas of banking services and its associated activities in the capital markets. Poalim Equity invests across various sectors, geographies and strategies, in addition to providing a wide range of advisory services to private client companies and public ones.
Reem Group, controlled by the Nakash family, is an established business family who owns additional prominent holdings in Israel including: Arkia Airline company, the hotel chains Orchid, Setai and Herbert Samuel and the port of Eilat, in the south of Israel. Reem specializes in the acquisition, construction, development and management of income – producing real estate assets including office complexes, commercial and industrial real estate and hotels. The Group is currently developing and marketing over 10,000 apartments and operating over 300,000 sqm of commercial and office spaces and 1,000 hotel rooms.
Shapir, a publicly traded company with over $3 Billion in market cap. and one of the leading companies in the industrial sector in Israel, has invested an initial amount of $23 Million, and has the option to acquire additional stake in the company. Upon exercise, Shapir will hold a minimum stake of 70% of Avrot, with a minimum transaction value of c. $40 Million.
Shapir Engineering is Israel's leading industrial, engineering and infrastructure company. Shapir has earned its reputation thanks to its many years of experience in planning and managing large projects, where technological innovation is assimilated and unique solutions are implemented in diverse and complex projects. Such projects include: tunnels, interchanges, bridges, marine engineering, and many more.
Avrot, a publicly traded company, specializes in the lining and coating of steel pipes for various end-uses, such as:
transportation of water, sewage, sea-water, gas and petrol in the industrial, municipal and agricultural sectors.
Portofino accompanies its customers continuously and widely over the years. The current transaction is the result of long-term support from two parties (Nakash Group and Manrav) in a variety of real estate transactions, some of which were jointly led during 2020 to a transaction in which the Nakash family together with Israel Canada acquired Minrav. And then with the repositioning of the Minrav company, a change of name, and the company's brand to its current name - ICR, Portofino continued to accompany fundraising with Leumi Partners.
Portofino served as the exclusive investment banker in the acquisition of a minority stake in ICR (formerly Minrav Projects) at a company valuation of NIS 800 million, by the investment arm of Leumi Bank – Leumi Partners. The transaction included the acquisition of shares from Re’em Holdings, a company held by the Nakash family, and an investment into a newly formed Special Purpose Vehicle which will serve as the parent company of ICR.
Established in 1980, Leumi Partners has grown to become Israel’s premier banking investment arm, responsible for managing the Leumi Bank investment portfolio, which is the largest operating company portfolio in the Israeli banking sector. The Leumi Bank is among the two largest banking firms in Israel, with more than 13,000 employees and a global presence in key financial centers worldwide.
ICR is a veteran real estate development corporation with over 30 years of experience. The company specializes in the construction of luxury complexes in exclusive areas, alongside residential neighborhoods across the country, and is owned by two industry leaders – the Reem Group and the Canada-Israel Group. The two groups are active and experienced in a wide variety of real estate markets, including hotel development in areas of high demand, urban renewal in select cities throughout the country and more.
Portofino served as the exclusive sell-side investment banker in the sale of 50% of Sa'ar A.T Enterprise & Trade for an amount of $26 million to Electra Consumer Products. The transaction structure included an investment into Sa'ar in exchange for newly issued shares, as well as the acquisition of shares, based on a company valuation of $40 million.
Founded in 1951, Electra Consumer Products is a publicly traded company, and one of the leading firms in Israel in the field of home appliances, air conditioning and other consumer products. Electra is engaged in manufacturing, importing, marketing and providing services for a wide range products and has an annual turnover of c. NIS 2.5 billion and c. 1,600 employees.
Sa'ar is an importer and manufacturer of equipment and clothing for traveling, camping, outdoor sports and leisure, and holds the concession in Israel for the global brand - Colombia. Sa'ar operates 3 retail chains and a total of 34 branches: the Columbia chain for hiking and leisure fashion which has 17 branches, the Outsiders chain which has 8 branches, and the Shvilim chain which has 9 branches.
Sa'ar is a supplier of the IDF and other Israeli security agencies, as well as government ministries and private companies operating in the security sector. Sa'ar also sells its products to stores and chains throughout the country and operates two E-commerce sites, Colombia and Outsiders.
FIMI Opportunity Fund, the largest and one of the most active PE funds in Israel, acquired a controlling stake in the publicly traded IT company – E&M Computing Ltd. ("Emet Computing") for USD 140 million. The transaction between FIMI and Emet's shareholders is the largest acquisition in recent years in the Israeli IT services market.
Portofino investments was acting as the sole advisor in the transaction on behalf of both parties. As part of the advisory services, Portofino assisted the parties in structuring the deal including all financing aspects.
FIMI fund has completed over 94 investments, executed 64 exits with total transaction value of more than $5.5 billion. Its track record includes: Retalix Ltd. – purchased by NCR Corporation for over $800M, Lipman Engineering Ltd. – purchased by Verifone Systems, Inc. for over $900M, and many other successful deals. FIMI invests in companies with significant growth potential and tangible growth engines, and its investments are spread over a variety of sectors including: automotive, electronics, tech, metal, software, aviation and more. Since inception, FIMI has raised seven PE funds with over $4.3 billion in aggregate capital commitments and its performance has been exceptional by both local and global standards.
Founded in 1984 and publicly traded on the Tel-Aviv Stock Exchange since 1993 (TASE:EMCO), Emet Computing is a leading solutions provider for Cloud information systems and Data-Center technologies. With multiple offices in Israel, worldwide distribution and a workforce that includes over 1,000 experts, EMET Computing provides Tier-1 clientele with innovative and state-of-the-art technologies, supported by initiating consultancy, deployment and maintenance services.
