ISRAEL 
HIGH-TECH & INVESTMENT REPORT

from the October 2000 issue


Conference, Listening to Danny Fishman Ahead of the 4th Annual Growth Conference

Tamir Fishman & Co., (TF) founded slightly more than three and a half years ago, has grown into a full service investment bank. At its Rothschild Boulevard, Tel-Aviv headquarters it employs 80. Its rapid growth parallels the dynamic expansion of Israel's high-tech sector. The Tamir-Fishman group focuses, nearly exclusively, its investment attention on the technology and emerging growth industries sectors.

A propitious representation agreement, early in 2000, with the American Dain Rauscher Wessels, links the American's services and reputation as a global investment bank with TF's understanding and experience in the turbulent local technology market, where three new startups are thought to be born each day.

Corporate finance activity involvement totals $3.2 billion, over the past three and a half years. In a wide ranging discussion with Danny Fishman, Co-President and CEO of TF he stressed that the "deal flow is nothing short of fantastic". Over a period of a few months, TF has been the object of 500 approaches by technology firms to provide financing. "They reach us by e-mail, they send in their business plans, they arrange for their names to be brought to our attention by mutual friends and others make contact by way investment banks. I expect the surging deal flow to continue, but perhaps the rate of growth may slow," commented Danny Fishman.

The 40 plus year old executive is most comfortable in describing cross border banking activities. He spent four years in the Government's privatization effort to privatize the 250 companies owned by the Government of Israel. Prior to that he earned his MBA at the Hebrew University of Jerusalem. The University's economics department is famous for turning out many graduates who have climbed to the pinnacle in the business world as well as in academia. "I served in the Israel Defense Force's intelligence 8200 unit. This is the unit from which half the country's high-techies have graduated," states Fishman, with a broad grin on his face.

TF manages two venture capital funds. One is the $ 120 million in Tamir Fishman Ventures 2, and the other is the $ 55 million Eucalyptus Fund. The latter has experienced three exits including RADWare, a highly well received IPO, Chromatis, a $4.5 billion buyout by Lucent and the most recently in September, ViryaNet Ltd. The company offered 4 million shares at $8 each in its IPO, raising $32 million through the deal.

In addition TF manages NIS 200 million ($50 million) in mutual funds and its asset management activities account for NIS 1.5 billion or $375 million. These moneys are entrusted to TF by high net worth individuals, many of them flush with large sums derived from M&A activities and sale of founders' shares. Options management of $3.5 billion covers 25% of Israel's high-tech employees. The offering of a service to high-tech option holders has only became popular in the past few years as nearly every high-tech employee receives options as part of the remuneration package.

In an environment of many mergers and IPOs, cashing in on options requires knowledge of tax and stock exchange law and practices as well as a ready access to market brokerage facilities. TF offers this service and the owner of the options "receives Israeli shekels in his account. We even arrange for the payment of taxes due," explains Danny Fishman. Corporate finance activities are in excess of $3.2 billion and with nine IPOs in the pipeline are likely to exceed $4.0 billion.

'The M & A Tax Law is a really bad one..'
A Jerusalem based research tank expressed the opinion "that any CEO who insists on registering a local start up in Israel should be canned". This comment was widely reported in the media. "It is an advantage to register as a US company. But the real and compelling reason is the Merger & Acquisition law in Israel. It is a really bad one. I think it should be a top priority of the Government which is losing billions of dollars in corporate and individual taxes, to make the small changes which will make all the difference. When Israeli sell companies they do not get paid in cash but in stock. The tax is due on the merger (sales price) but the shares received in payment are not saleable immediately and may only be saleable months or a year later. There is no guarantee that counter value of the sale will suffice to pay the tax. "I was involved in an M&A transaction between and Israeli and American company. The Israeli company was to be sold for $150 million in stock and the tax liability would be $75 million. The deal did not go through. In the US you pay tax when you have a real exit. The tax level should be the same as in the US with the Israelis paying the same tax as all the world is paying," animatedly pointed out Danny Fishman, in an uncharacteristic outburst by an otherwise self-controlled investment banker.

Nearly every recent high-tech event has drawn unprecedented attendance. But the 4th Annual Growth Conference, with a record 125 companies presenting themselves, and an overall attendance of more than 2,000 is likely to be a' standing room only' event.

IHTIR will be there to cover the Conference



Reprinted from the Israel High-Tech & Investment Report October 2000

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