ANT KATZ

Chinese companies are “swooping Into Israel looking for tech investments”, according to an article published last week Wednesday in the WALL STREET JOURNAL. The Yongjin Group had invests between $15 and $20 milion in Pitango Venture Capital, said the newspaper.

“Chinese investors are pouring millions into Israel-focused, tech-investment funds – as well as launching their own funds and investing directly in Israeli start-ups – amid a frenzy of tech investment and deal making” in the country, said the WSJ.

Yongjin Group Inc is a Chinese equity-investment management and financial-services company and had been investing heavily into Israeli venture fund Pitango Venture Capital during the past year, according to people familiar with the matter, wrote the WSJ.

This news comes hot on the heels of SA Jewish Report’s article earlier this week “INTEL MAKES BIGGEST EVER INVESTMENT” – being both the biggest investment the chip giant has ever made as well as the single biggest direct foreign investment (DFI) which had ever been made in Israel – the princely sum of $6 billion.

Giant Chinese PC-maker moved in last month

Lenovo Group Ltd, the big Chinese computer maker which took over IBM’s PC business some years ago, had invested around $10 mil in Canaan Partners Israel, a venture fund affiliated with American-based Canaan Partners, in late August.

And Ping An Venture, the venture investment arm of Ping An Insurance (Group) Co, one of China’s biggest financial conglomerates, recently created a $100 mil fund dedicated to US and Israel tech ventures. It has made six investments in Israeli start-ups so far, said Jiang Zhang, an associate director at Ping An Ventures.

The moves come amid a frenzy of fundraising among Israeli entrepreneurs. Israeli and foreign investors – lured by a drumbeat of stock market listings and acquisitions among Israeli tech start-ups – have rushed in. In the first half of 2014, 335 Israeli hi-tech companies raised a record $1,6-bil in capital, according to estimates by consultancy IVC Industry Analytics and KMPG. That was 81 per cent higher than in the year-earlier period.

New market for Chinese investors

While Israeli, European and American investors have long trawled Israel for tech opportunities, Chinese investors are relatively new there. Industry insiders say so far they have preferred longer-term bets and looked for technology that is already being used back home, or sought investment possibilities there.

“Most of the investments we’re seeing are strategic investments and not purely financial ones,” said Yoav Sade, a partner in law firm Meitar Liquornik Geva Leshem Tal and vice chairman of the Israel-China Chamber of Commerce.

“Chinese investors would look for tech companies that already have a product and sales with an added value that has to do with China,” said Sade. “Many times the investment contracts include commercialisation licences for operations in China.”