Israel LBOs face practical challenges

Author: IFLR Correspondent | Published: 20 Oct 2016

The market is growing but local limitations are hampering its companies’ ability to provide financial assistance for their own acquisitions

During the past two decades, the Israeli economy has been increasingly opening up to the global markets. Combined with the rise of the Israeli hi-tech sector, this has resulted in greater economic interest in the country.

As part of this trend, international sponsors and lenders have been taking an ever-increasing role in the development of a local leveraged buyout (LBO) market. A few examples include the acquisition by Apex Partners of a controlling interest in Bezeq (previously Israel's national telecommunications operator), Tnuva (Israel's largest food manufacturer) and Psagot (Israel's largest investment house), as well as the recent acquisition by BC Partners of a controlling interest in Keter Plastic.

Such sponsors and lenders face some challenges, but there are available solutions.

Avoiding classification as direct financial assistance The main legal challenge in...