The collapse of Silicon Valley Bank (SVB) raised immediate concerns about the impact on Israeli institutional investors. In recent years, they have moved more and more investments offshore in order to increase returns for savers, as the amount of assets under management has increased.
Currently, no Israeli institutional investor directly owns SVB shares. Psagot held a modest $234,000 worth of stock at the end of Q3 2022 in its mutual fund, but that stake was sold three weeks ago.
However, according to SmartBull, a platform that analyzes institutional investments, Israeli institutional investors have invested hundreds of millions of dollars in the bank’s investment funds, venture capital funds and technology companies in Israel that managed funds there, and here the question arises as how those investments will be affected by its collapse. In any case, the savings market believes that the impact of the SVB collapse on public retirement savings in Israel will be marginal, if any.
Investment of hundreds of millions of dollars
Two Israeli institutional investors, who in recent years have sought to increase their exposure to the growing technology sector, have invested hundreds of millions of dollars in investment funds managed by SVB.
Migdal Group (TASE: MGDL) has investments in venture capital fund SVB Capital amounting to $213 million and investment commitments amounting to a further $41 million.
Harel Group (TASE: HARL) has invested $18 million in SVB Capital and an additional $28 million in venture debt fund SVB Innovation, which provides collateral-based loans to startups. Harel has also pledged to invest an additional $107 million in the fund.
Migdal said: “Migdal Insurance Company has no exposure to SVB but invests in fund management activities managed by the bank. The venture capital funds in which Migdal invests are a separate legal entity and are managed separately by a The bank’s sister company. These funds are not a party to the proceedings with the bank. Migdal will continue to closely monitor the events and their consequences, insofar as they are relevant.
Harel said: “Harel is not exposed to the bank but to debt funds managed by a subsidiary of the bank, which is a separate legal entity. Harel’s investments are not affected by the state of the bank. but by the state of the companies to which the loans have been granted.The funds are very dispersed and the loans are managed at a high professional level and are backed by guarantees.
Venture capital funds that were or are still clients of the bank
At the same time, Israeli institutional investors invested in venture capital funds that were or still are clients of SVB. For example, in Magma Venture Partners, Israeli institutions invested around $150 million at the end of the third quarter of 2022.
Israeli institutional investors have an even bigger investment of $240 million in venture capital fund Zeev Ventures, with an additional $28 million committed.
Phoenix Holdings (TASE: PHOE) has a $4 million investment in Elie Wurtman’s Pico Ventures with an additional $13.5 million commitment.
In addition, there are direct investments by institutional investors in the shares of several tech companies with money in SVB, some of which have been successfully withdrawn and transferred elsewhere, including to Israeli banks. These institutional investments total approximately $60 million, with Phoenix alone holding shares worth $26 million at the end of the third quarter of 2022.
For example, the institutions held approximately $40 million on the Similarweb (Nasdaq:SMWB), with Phoenix holding approximately $18 million at the end of Q3 2022. More and Migdal each held over $9 million. Israeli institutional investors held about $17.5 million in Innovid (NYSE:CTV), with Phoenix being the largest investor with nearly half the amount, while Harel and Migdal each have a few million dollars in Innovid. .
Published by Globes, Israel business news – en.globes.co.il – March 12, 2023.
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