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Israel attractive for overseas investors

1.  A 60 year track record (1948-2008) – GDP increased 60 times, 7% annual average (current GDP annual growth rate per capita – 3.5%); the fastest population growth in the industrialized world; lowest inflation in 60 years; lowest rate of government expenditures; lowest level of defense expenditures; positive trade balance achieved recently; however, all time record of socio-economic gaps (Merav Arlozorov, The Marker, Jan. 8).

 

2.  $1.76BN raised by 462 Israeli high-tech companies, the highest since 2001 ($2BN), an 8.5% increase compared with 2006 – $1.6BN, 2005 – $1.3BN, 2004 – $1.1BN, 2003 – $1BN, 2002 – $1.1BN, 2001- $2BN, 2000 – $3BN, 1999 – $1BN.  The share of overseas investors increases systematically – 61% in 2007 (The Marker, Jan. 14, 2008, Globes, Jan. 14). 

 

3.  2007 acquisitions: 70 Israeli companies acquired for $5BN by overseas companies and 56 overseas companies acquired for $3.15BN by Israeli companies (The Marker, Jan. 8). The British Ecofin is acquiring 40% of Israel’s Solel Thermo-Solar Technologies for $150MN (Globes, Jan. 14).  $8.6BN Network Appliance acquired Israel’s Onaro for $120MN in cash.  Its 1st Israeli acquisition was Topio, in Dec. 2006 for $160MN in cash (The Marker, Jan. 4).  The US-based Rxelite acquired Israel’s FineTech for $10MN in cash ($6MN) and stock (Globes, Jan. 14).

 

4.  Yahoo is establishing – in the footsteps of Google, Microsoft and scores of additional global giants – an R&D center in Haifa (The Marker, Jan. 14).  Marvelle’s CEO is visiting Israel, examining its 3 Israeli acquisitions (initiated by Galileo’s acquisition for $2.7BN in 2001 and followed by the 2003 Redlan’s $50MN acquisition and the 2006 DSPC/Intel $600MN acquisition) and its Israeli R&D center and its 1,100 personnel, the 4th largest by an overseas investor following Intel, HP and Motorola. Marvell invests $200MN annually in its Israel operation.

 

5.  USVP has led a $12MN 2nd round of private placement, by Israel’s Dune Networks, joint by the British Alta Berkeley Ventures, the San Jose-based Cipio Partners and a few Israeli VC funds (Globes, Jan. 15). 

 

6.  Israel attractive for overseas investors (OI): OI are exempt from interest on (transferred) foreign exchange deposits and from capital gain tax on future transactions; overseas company qualifies for an OI status if Israelis do not own more than 25% equity and are not entitled to more than 25% income; OI benefit from 50 double-tax (avoidance) treaties; OI is exempt from capital gain tax on (non real estate) traded stock and bonds; OI are exempt from capital gain on all high tech stock; Israeli holding companies are exempt from capital gain tax on the sale of the stock of its overseas companies and on overseas dividends and interest, provided that at least $50MN are invested in the overseas companies (The Marker, Ofer Orlitzky, Jan. 4).




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Straight from the Jerusalem Boardroom #248
https://bit.ly/3u29k9g

Foreign investment in Israel’s high-tech companies surged to new heights in the 1st quarter of 2021 – $5.7bn in 172 deals – which is up 89% over the impressive 4th quarter of 2020 and double the volume of the 1st quarter of 2020.

2020 was the first year of surpassing $10bn in capital raised by the Israeli high-tech sector from investors in the US, Asia and Europe, who trust the maturity of Israel’s brain power. Investments in Israeli companies more than tripled in six years, reflecting the effective response by Israeli startups to the technological, medical, pharmaceutical, educational, social and digital challenges posed by Covid-19.

Israel’s economic performance in defiance of Covid-19 is presented by Dr. Adam Reuter, the Chairman and Founder of “Financial Immunities,” Israel’s largest financial-risk management firm, and the co-author of Israel – Island of Success:

  1. Israel has led the globe in the rapid administration of Covid-19 vaccinations due to effective negotiations with Pfizer and an efficient, country-wide medical infrastructure.
  2. Israel is the second lowest among OECD countries in the number of Covid-19 deaths per number of Covid-19 cases: 0.7% compared to the 2.3% OECD average. Israel features a young population (median age of 30 compared to the OECD’s 42) and an effective country-wide medical infrastructure, including top level HMOs and hospitals.
  3. Israel is ranked 12th from the bottom among the 37 OECD countries in the number of deaths per million inhabitants: 645 compared to 1,145 OECD average.
  4. The International Monetary Fund’s 2025 GDP growth forecast for OECD countries: Israel – 4%, OECD average – 2.2%, US – 1.8%, Australia – 2.5%, Ireland – 2.6%, France and Canada – 1.7%, the UK – 1.6%, Germany – 1.2%, etc.
  5. Israel’s 2020 GDP was reduced by 2.5%, compared to the OECD average reduction of 4.1%, South Korea – 1%, Norway – 0.8%, Australia – 2.6%, US – 3.5%, Japan – 4.8%, Germany – 5%, France – 8%, the UK – 10% reduction, etc. GDP growth was recorded in New Zealand – 2.4% and Ireland – 3.5%.
  6. In 2020, Israel was ranked 20th among the 37 members of the OECD in terms of GDP per capita, featuring $43,000 (GDP – $408bn), ahead of Japan, Italy and Spain, and very close behind the UK ($44,000) and France ($45,000).
  7. Israel’s debt-to-GDP ratio increased from 60% in 2019 to 72% in 2020, compared to the OECD’s average increase from 66% to 82%. The 2020’s debt-to-GDP ratio was 266% in Japan, Italy – 161%, the US – 131%, Germany – 73%, etc.
  8. Israel’s foreign exchange reserves-to-GDP ratio of 41% (3rd among the OECD countries) attests to its financial stability, and Israel’s capability to raise foreign credit promptly in a cost-effective manner. Israel’s foreign exchange reserves in March 2021 – $186bn.
  9. During the past decade, Standard and Poor (S&P) accorded Israel a positive credit rating trend, unlike the negative trend for the G-7 countries. In 2020, notwithstanding Covid-19, Israel’s credit rating (S&P) remained at AA.
  10. Some 380 global high-tech giants operate in Israel, including Microsoft, Amazon, IBM, Intel, Cisco, Apple, Verizon, Applied Materials, Dell, HP, Kodak, Oracle, Philips, SAP, Medtronics, GM, eBay, GE, etc. Israel leads the world in the ratio of research and development investment to GDP: 4.9%. 85% of this investment comes from the business sector.

 




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