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2018 Opportunities in the Israeli Market

Despite the many internal and external challenges unique to Israel, the country has successfully transformed itself into a powerhouse of technological innovation. Israel has become an excellent destination for international business, boasting a strong local currency, an active local economy, and robust export industries. 


Technology and Innovation

Israel is a center of technological excellence in the innovation and technology spheres. It regularly attracts leading international companies looking to invest in and acquire innovative technologies.


Companies in the medical devices, cyber security, automotive technology, artificial intelligence, and fintech fields are among those whose technologies have already attracted significant non-Israeli investment and who are expected to attract significant non-Israeli investment well into the second half of 2018.


The “Start-Up Nation” nickname definitely encompasses not only traditional centers in Tel Aviv, but also working spaces, accelerators, incubators, and early-stage funds in Haifa, Herzliya, Jerusalem, the Galilee, and Be’er Sheva. Major international companies have decided to invest in incubators and accelerators as a way of spotting future stars with original ideas and technology.


The Israeli government is also endeavoring to support the technology ecosystem. For example, last year, new tax rules came into effect, benefitting multinational companies holding their intellectual property in Israel, and expanding the scope of tax deferrals for corporate restructuring. 



A number of Israeli infrastructure projects are currently in the works. These projects traverse a broad range of sectors and provide a good opportunity for international corporations.


In the energy sector, a new electricity reform will enable the entry of new players into the electricity sector. The reform is expected to end the monopoly of the government-owned Israel Electric Company (IEC) and permit competition from independent power producers (IPPs).


Over the next five years, as part of the reform, and in a bid to increase competition in electricity supply, the IEC will sell off to the IPPs several gas-fired power stations – in Eshkol, Reading, Alon Tavor, Ramat Hovav, and the eastern part of the Hagit site. This step will promote the entry into the electricity sector of new players who are interested in purchasing and modernizing the gas-fired power stations currently held and operated by the IEC. 


Also, the Israeli government is planning to publish tenders for the construction of Israel’s largest solar site, with a capacity of 500 megawatts. This site is expected to be one of the largest solar sites in the world.   


In the water sector, the Ministry of Finance recently published a giant PQ invitation for the construction of the sixth desalination plant in Israel. With an annual capacity of 150 million m3/year, this plant will be the largest desalination plant in Israel.


The Israeli transportation sector is also in the midst of certain mega projects, mostly involving the development of light railways in Jerusalem and Tel Aviv. These projects include the extension of the Jerusalem Light Rail, and the upcoming construction of the green and purple lines of the Tel Aviv Light Rail.


Also, as part of Israel’s five-year development plan published in late 2017 to modernize its infrastructures, the Israeli government has expressed its intention to extend Israel’s network of highways. It is due to publish tenders in this respect, on the basis of either PPP concession projects or simple turnkey projects.  



Investments and capital markets are flourishing in Israel, as both high-tech and mid-tech companies continue to attract investors throughout the various stages of their business: early-stage angel investors, venture capital and strategic investors, and private equity and hedge funds.


Israeli companies seeking an exit are also setting their sights on the capital markets – in Israel and abroad. The efforts of the Tel Aviv Stock Exchange, and the easing of certain requirements introduced by the Israel Securities Authority, have begun to bear fruit. In 2017, more than 15 new companies (either local or foreign) joined TASE and trading volumes on the exchange rose. 


Raising new investments continues to run in parallel to the strong trend of merger and acquisition transactions, led primarily by international corporations acquiring Israeli-based companies.


Israel’s Potential

Whether through investments or bids for projects, international companies have more opportunities than ever to gain a foothold in this small but thriving country’s economy. 


Source: barlaw.co.il