Private Equity - Israel

Israel

The deal value in the Private Equity market is projected to reach €4.42bn in 2024.
It is expected to show an annual growth rate (CAGR 2024-2025) of 14.93% resulting in a projected total amount of €5.08bn by 2025.
The average size per deal in the Private Equity market amounts to €73.64m in 2024.
From a global comparison perspective it is shown that the highest deal value is reached in the United States (€545,100.00m in 2024).
In the Private Equity market, the number of deals is expected to amount to 65.99 by 2025.

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Analyst Opinion

The Private Equity market in Israel has faced considerable decline, influenced by factors such as global economic uncertainties, shifting investment priorities, and decreased fundraising activity, impacting overall growth rates in recent years.

Customer preferences: Investors in the Israeli Private Equity market are increasingly drawn to sustainable and impact-driven ventures, reflecting a growing consumer preference for responsible investing. This trend is shaped by a younger, socially conscious demographic that prioritizes environmental and social governance (ESG) factors in their investment choices. Additionally, the rise of technology adoption among diverse sectors has spurred interest in digital transformation initiatives, fostering opportunities for funds focused on tech-driven startups aimed at enhancing efficiency and sustainability across industries.

Trends in the market: In Israel, the Private Equity market is experiencing a notable shift towards sustainable investment strategies, with funds increasingly prioritizing environmental and social governance (ESG) in their portfolios. This trend is fueled by a younger, socially aware investor base that demands accountability and transparency in their financial decisions. Moreover, the technology sector is expanding rapidly, prompting increased interest in digital transformation initiatives, particularly in startups focused on sustainability solutions. This alignment of technological advancement with responsible investing is reshaping the landscape, creating new opportunities for stakeholders committed to both financial performance and positive social impact.

Local special circumstances: In Israel, the Private Equity market is uniquely influenced by its robust technology ecosystem and a vibrant startup culture, which foster innovative approaches to investment. The country's emphasis on research and development, coupled with strong military technology expertise, accelerates the growth of tech-focused funds. Additionally, cultural factors, such as a collective societal commitment to social issues, drive demand for sustainable investment practices. Regulatory support for ESG initiatives is enhancing transparency, creating a distinctive environment where financial returns align with social responsibility, differentiating it from other markets.

Underlying macroeconomic factors: The Private Equity market in Israel is significantly shaped by macroeconomic factors, particularly the policies of the central bank regarding interest rates. Low interest rates tend to reduce the cost of borrowing, facilitating access to capital for private equity firms to invest in startups and tech companies. This encourages greater investment in innovative sectors, propelling market growth. Conversely, rising interest rates can constrain capital availability and dampen valuations, leading to a slowdown in deal-making activity. Additionally, broader global economic trends, such as inflation and geopolitical stability, further influence investor sentiment and strategic allocations within the private equity landscape.

Methodology

Data coverage:

The figures are based on deal value, number of deals, the average size of each deal, and assets under management within the Private Equity market.

Modeling approach / Market size:

Market sizes are determined through a combined top-down and bottom-up approach, building on a specific rationale for each market segment. As a basis for evaluating markets, we use annual financial reports of key players, industry reports, third-party reports, and publicly available databases. In addition, we use relevant key market indicators and data from country-specific associations, such as: GDP, total investment (% of GDP), household wealth (per Adult), high income (% of population), and number of high-net-worth individuals (HNWI). This data helps us estimate the market size for each country individually.

Forecasts:

In our forecasts, we apply diverse forecasting techniques. The selection of forecasting techniques is based on the behavior of the particular market. In this market, we use the HOLT-damped Trend method to forecast future development. The main drivers are total investment (% of GDP), household wealth (per Adult), number of high-income persons, and number of high-net-worth individuals (HNWI).

Additional notes:

The market is updated twice a year in case market dynamics change.