Over a lifetime of observing successful participants in the financial
world, I have learned that they invariably share certain unique
personal qualities.
Obviously, they are smart and highly educated and without these
qualities they would be unlikely to reach the very top. But others
have both the smarts and the education and do not reach the top. What
is the missing quality? Less visible is a finely honed ability to
apply exquisite timing. In retrospect, it is the right move at the
right time, a change of professional direction or a move to another
company. Invariably it is the timing that has resulted in a winning
result.
In that context I have noted the move taken by the very talented
investment banker Ron Lubash, has announced that he is leaving the
post of managing director of the Lehman Brothers Israel office. It
was the young Lubash, in his mid 30s who convinced Lehman Brothers to
establish a full-fledged investment banking office in Israel.
In retrospect, 1994 could not have been a better year to set up shop
as for the rest of the decade business boomed and the Israeli office
led by Ron Lubash garnered more IPOs and M&A transactions than anyone
expected. Wall Street loved Israel and Israeli entrepreneurs,
especially the high-techies. They flocked, either to Robertson
Stephens or Lehman Brothers to discuss their financial needs and to
cut deals.
Then came 2000 and the beginning of the end of the frothy period when
money was flowing, prices escalating and investment bankers were
admired for their skill in creating wealth. Ron Lubash, no less than
Andy Kaye, his counterpart at Robertson Stephens conducted himself
admirably. Always available for interviews or a conference
appearance, his presence and comments were sought, but there was
little that Lubash could do as equities plummeted and scandals
overtook Wall Street. The Israeli activities of the Lehman Brothers
Tel-Aviv office, without seeing actual figures, could hardly support
the cost of staying open. Robertson Stephens closed its Israeli
office and the firm eventually went out of business.
Ron Lubash has made his next move and it is worth analyzing. He has
assumed the position of director of a new private equity fund aimed
at investments in Israel. The fund intends to raise $250 million and
will be called Markstone Capital.
The fund will target "old economy" business such as real estate and
leveraged buyouts of firms. The fund has already received pledges of
$100 million from the New York State pension fund and the remainder
of the monies will be raised from other foreign investors.
The fund's offices will be in Tel-Aviv at first. Markstone is named
after Mickey Stone Marcus the Israeli-American general, who was
killed by friendly fire in battle, near Jerusalem in 1948. The fund
will invest in both public and private Israeli companies, and will
undertake leveraged acquisitions. It will compete with Apax Partners
and First Israel Mezzanine Investors (FIMI), in private equity
investments. The New York pension fund is the second largest
institutional investor in the US, after the Calpers, the California
state employees pension fund and is the largest investment so far of
the New York fund in Israel.
The timing of the founding of Markstone Capital, in our view is
nothing short of brilliant. Economists in the United States are
looking ahead to 2004 as a possible date for an upward turn in the
American economy. Wall Street professionals are not expecting, for
the time being, a return of an active new issue market. Venture
capital funding for Israeli companies, is scarce. The funds have lost
massively and are trying to find funding for their old
investments.They cannot, at this juncture think of raising new
capital for new investments.
Markstone Capital, in our view, will be courted and will have the
choice of the very top investments. By the time these investments
will mature, in 2-3 years, the capital markets will have returned to
buoyancy, capital will be more accessible and the prospect for
mergers, joint venture and strategic partnerships will have improved.
The timing is "spot on" for still another reason: investments are
very reasonably priced.
Few financial managers know Israel as well as Lubash does. He is a
home grown product, US trained and Israeli experienced. Investors in
Markstone Capital will be getting a good run for their money.
Adding a touch of optimism as to the future of the Middle Eastm we
were treated to the first face to face meeting between Israeli and
Palestinians after more than 32 months of strife, during which more
than 2,000 Palestinians and nearly 800 Israelis were killed.
The Aqaba summit ended during the first week of June on an upbeat
note, with Palestinian PM Abbas pledging an unequivocal end to
terrorism; PM Sharon promising to immediately dismantle settlement
outposts, and President Bush reiterating U.S. commitment to two
states living side by side in peace and security. Both Sharon and
Abbas went to great lengths to express understanding of the suffering
of the two peoples.
At least for a moment there was a feeling that a new chapter in the
history of the strife torn Middle East may have been opened. For
investors nothing beats a scenario of peace, security and stability.