Israeli Private Equity Firm Viola Raises $250 Million


April 16, 2015

Private equity company, Viola Private Equity, announced on Wednesday that it has reached its targets with the latest investment fund.  The Israeli firm has been able to raise $250 million with the fund and the firm said there is possibility the fund will remain open for the time being. The firm will use the fund to invest in technology companies, especially in Israel. The firm was able to attract a lot of interest from around the world with its latest fund. It is another proof that the Israeli start-up scene, with innovative technology companies, is attracting a new flux of investment.


Viola Private Equity Fund
The fund, called Viola Private Equity II, had targeted $250 million, which it has now successfully raised. But the firm’s official statement noted that the fund might stay open until it reaches $300 million. The fund is set to make around 10 to 12 investments in growth-stage technology companies in Israel. In fact, some of the money has already been invested.


Just a few weeks ago, Viola Private Equity invested with the new fund to a company called The company is one of the leading e-commerce companies that are focused on providing prescription eyewear to US consumers. The site offers attractive prices in both branded and private-label models.


Harel Beit-On, founder and general partner at Viola Private Equity, said in the statement, “Driving growth and expansion for established technology companies is what we do best in Viola Private Equity. Israel is generating a growing pipeline of growth stage companies and this trend presents remarkable opportunities for us, as value creators.”


The Firm’s History
The firm was founded in 2008 and it is part of the Viola Group. It currently has more than $410 million of assets under management, with the focus being on value creation. The firm provides companies with direct capital investment, as well as management support. It has previously been especially keen on finding opportunities in Israel.


Four general partners, who are Harel Beit-On, Sami Totah, Ayal Shiran and Jonathan Kolber, currently run the firm. They all have plenty of operational and investment experience in private equity. The previous fund, Viola Private Equity I, invested in 12 companies. The firm has already made an exit in four of these companies. One of the four companies, Matomy Media Group, was listed in 2014 on the London Stock Exchange. Viola Private Equity has realised some of its holdings in Matomy Media Group.


On the day that it announced the fund, the firm also said it has made its fourth successful exit. According to Geektime, the firm made an exit from Orad Hi Tech Systems, a company providing software solutions for broadcasters. The other two companies were sold forward. MobileAccess was acquired by Corning Inc., with Viola Private Equity also selling off its stake in Amiad Water Systems.


Investment from a Variety of Sources
The second fund was able to attract investors from all over the world. According to reports, the fund attracted equity from institutional investors, as well as family offices. These investors were from the US, Europe and Israel. But more importantly, the firm was also able to receive investments from Asia. Chinese investors were part of the fundraising effort, something the Viola Group has tried to focus on recently.


For example, its other private equity arm, Carmel Ventures, launched a $194 million fund last October. That fund was able to receive investment backing from notable Asian investors, such as Baidu. Baidu has in recent months also invested directly on two Israeli start-ups: Qihoo360 and Ping-An.


Furthermore, Viola Private Equity’s general partners and affiliates made sizeable contributions towards the fund. One such affiliate was the Munich Private Equity Partners (MPEP). MPEP’s managing director John Morrison told Globes, “The Israeli tech entrepreneurs and investors have become more focused on building large significant companies. Demand for technology growth capital in Israel is growing and Viola Private Equity is well positioned to fulfil this need and partner with the most promising companies coming out of Israel. We are pleased to continue our successful partnership with the Viola Private Equity team and back them in Fund II.


The Fund’s Aim
As mentioned above, the fund is set to invest in around 10 to 12 growth-stage technology companies. Harel Beit-On said in the statement, “By leveraging the track record of our team members and the Viola Group’s ecosystem we aim to turn recognised companies into global tech leaders and accelerate their growth.”


According to reports, the invested equity per company will range between $20 and $40 million. Beit-On told Geektime, the firm is looking to find companies “with more than $15 million per year annual revenue”. “We’re a later-stage investor. In order to make money, we need the companies to scale considerable. We need to be addressing large markets with innovative products,” Beit-On told Geektime. The private equity firm is interested in other sectors as well. For example, healthcare and security offer plenty of innovative companies and growth possibilities.


Israel’s Growing Technology Sector
Israel is still the one of the world’s leading start-up hubs. It is providing plenty of opportunities for private equity firms and has started to attract investors from Asia. Chinese investors have recently launched a number of projects and it is expected Chinese private equity will continue to flow to the country, as the sector in China continues to develop further.


Furthermore, the overall private equity investment in Israel has increased in recent years. According to Globes, a study by IVC Research Center and Gross, Kleinhendler, Hodak, Halevy, Greenberg & Co. (GKH), 45 Israeli and foreign PE funds invested $2.18 billion in 69 deals in the country last year. This was a 10% increase to the $1.98 billion invested the previous year in 71 deals.


According to Rick Mann, the head of mergers and acquisitions at GKH, “The growing role of technology-driven transactions in the private equity space in Israel is the key lesson of 2014”. It will be interesting to see where Viola Private Equity will invest next and how well Israel will continue to attract PE investment.

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