Investment bank Morgan Stanley Dean Witter plans to route substantial funds to privately-owned Israeli startups, say local manager Yair Seroussi and VP Technology Investing Nadav Zohar.
Seroussi said that the bank made a strategic decision to boost its staff and increase its investment in private Israeli Internet and telecoms companies.
He believes the decision is a step up in Morgan Stanley's attitude toward Israel. During recent months the bank invested $100 million in six investments in Israeli startups and funds. The bank plans to choose five additional startups, for which purpose Nadav Zohar was brought over from the bank's Europe offices.
Between 1996 and 2000 the bank managed $60 million worth of private placements in technology companies. Although the Israel branch, managed by Seroussi since 1993, served as lead underwriter on several large public offerings, it had not made its own private placements as did competitor Goldman Sachs.
Morgan Stanley led the public offering of
(Nasdaq, LSE:PTNR) on Nasdaq, which brought the company $600 million. In 1999 it led IPOs by
Israeli management thinks that activity in 2001 will focused mainly on mergers and acquisitions.
The bank operates through four separate bodies that will invest in Israel at different levels of involvement. The Morgan Stanley Investment Fund, which raised $4 billion last year in a secondary offering, invests in Israel through its London-baesd branch. Ron Golan, a senior partner, manages those investments.
Golan said that for the purposes of investments, the bank considers Israel part of Europe. Hence Israel does not receive its own quota of funds. The fund's investments will focus on early stage private companies. Individual investments will range from $5 million to $20 million in companies valued at $40 million to $80 million.
A second investment arm operates through Seroussi and Zohar, who run the bank's Israel activity. Zohar says that the bank invests in early-stage companies and exposes them to bank customers such as
Morgan Stanley has invested in four startups so far: $10 million in NextNine, $6 million in Accera, $10 million in RichFX, and $25 million in Lazercom. At year-end 2000 the bank invested $15 million in Israeli venture capital Cedar Funds.
Zohar says that the bank is looking for firms with potential to become communication industry leaders. He added that at this stage, the bank would not be committing any funds to Israeli biotechnology firms.