Going Public Abroad How, Where and When November 2006
Infinity II $64M (2001) 19 investments 5% Net IRR Top Quartile! Infinity I + Annex $91M (1999) 21 investments (16%) Net IRR Infinity MS $75M (2002) 13 investments 29.4% Net IRR Top Quartile! Nitzanim $27M (1993) 13 investments 121% Net IRR Top Quartile! Infinity-CSVC (China Fund) $15M (2005) 5 investments 26.21% Net IRR Top Quartile! Assets and Track Record Infinity has managed over $270M* since 1993 Track Record: Average IRR Net/Gross: 33%/48% Top quartile (In the top 25% of comparable U.S. Vintage Funds )** *All figures include committed capital values ** Cambridge Associates March 31, 2006
Company Industry Exit Type Deal Value Industrial Equipment 51%acquiredby Johnson Electric Nanomotion $20M Acquired by eBay Internet Shopping. com $620M Scitex Vision Acquired by HP Printing $230M Native Networks Acquired by Alcatel Telecom $55M IP was acquired by Tessera Shellcase Semiconductor $33M IPO (Nasdaq: SFUN) Saifun Semiconductor $800M Maayan IPO (TASE: MAYN) Incubator $22M Iomai IPO (Nasdaq: IOMI) Medical Device $90M Acquired by Stryker Sightline Medical Device $140M Acquired by BMC $150M Identify Software Acquired by EMC ProActivity Software $22.5M $2.2B Total deal value Recent Exits
Communications Bianatech Unity Wireless Teledata Whole Optics Life Science Nicast Brainsgate Iomai Proneuron Glucon Visioncare Applisonix Galil Medical OpthtoCare Redent-Nova Diagnostica Intumed Semiconductor Shellcase Genesis-OS Cerel Smart Link Yitran Lucid Expert Dynamics Industrial Equipment Cognitens Nanomotion Power Paper Pulsar Microheat Software Red Bend Next Nine Prosight ProActivity Orsus Viryanet Cosmocom Telemessage Oridian – Online Media Solutions Revolver Tegrity Security CyberArk Mavix Mate Beepcard Other Bio-Sense Technologies Magink Infinity’s Portfolio
The list of the world’s largest economies may look quite different in 2050 The BRICs economies currently account for less than 15% of the combined GDPs of the G6. BRICs could become four of the top seven largest economies by 2050, with China leading the way. GDP 2050 US$ bn 50,000 40,000 30,000 20,000 10,000 0 US UK Iran Italy India Brazil Egypt China Korea Japan Turkey Russia France Mexico Nigeria Canada Vietnam Pakistan Germany Indonesia Philippines Bangladesh Source: Goldman Sachs For illustrative purposes only
Infinity: First in China In May 2004, Infinity and IDB/Clal co- founded the first Chinese registered foreign-invested VC fund (No. 00001). Infinity/Clal’s partner is the Chinese Government via investment arms: CSVC (China Singapore Venture Capital) and SIP (Suzhou Industrial Park). The event was monumental for pioneering venture capital in China and international business relations between Israel and China. The signing ceremony was attended by government leaders Ehud Olmert from Israel and the Deputy Prime Minister of China.
Key China Partnership – SIP/CSVC China-Singapore Suzhou Industrial Park (SIP) and Venture Capital (CSVC) • CSVC is a $455M VC fund, investment arm of SIP (Suzhou Industrial Park ). • Most advanced hi-tech park in China, created in 1994 by the Chinese and Singapore governments. • Four thousand companies operating in the park including 100 Fortune 500 companies. • Total land area of the park is 300 sq km. • Ten universities established campuses with post graduate school and hi-tech R&D industrial park. • Has its own government and tax authority.
China Partnership Achievements • Five investments in Israel-related companies • one profitable exit. • Three years of Israeli and Chinese team experience and cooperation. • Leveraging both government and corporate relationships. • Full risk sharing and alignment of interests with Chinese Government partners. • Both onshore and offshore financial flexibility. • Infinity’s portfolio company received the first ever direct equity investment by the Chinese government in an Israeli company. • Exclusive $30M commitment from the China Development Bank to co-investment with us.
A-shares: the most liquid equity market in China As at 20-Jan-06 for A shares and for other markets. 1 Qualified Foreign Institutional Investor 2 Companies traded on the Hong Kong Stock Exchange that have a Mainland Chinese corporate shareholder owning at least 35% 3 As at 20-Jan-06. 4 As at 20-Jan-06. 5 Average for 6 months to 31-Dec-05. Liquidity in the China A share market is better than the H-shares over the past 1-2 years in terms of daily turnover. Source: Bloomberg, CEIC.
The correction of P/E is due to both declining stock prices and growing earnings When fully implemented, the reform of non-tradable shares will potentially give existing shareholders 20-30% free shares and, we believe, therefore, will bring P/E down further Valuations are more attractive Shanghai A-share Composite Index Trailing P/E Source: CEIC
Then (2004) • On the verge of shutdown • $20million debt • Lack of focus, investors losing faith • Problem with order fulfillment • Problematic capital structure Now Shellcase - Infinity-led RecoveryWafer-level electronic product packaging technologies • Change of business model to an IP company separated from manufacturing • Build a manufacturing facility in China – profitable, a leader in wafer level manufacturing, received $20M China government support • Sale of the company’s patents to Tessera (NASDAQ –TSRA) for $33M • Created $80M value in one year “Infinity’s leadership and creativity saved Shellcase. It created and boosted a new industry” Shalom Daskal, CEO Shellcase
Then (2003) • Numerous challenges relating to production and attainment of strategic goals • Explore the option to bring Johnson Electric (the leading Chinese manufacture of motors and related products) as a strategic partner • Complex capital structure and difficult decision making processes Now • Sale of 51% to the Chinese Johnson Electric • 80% product cost reduction • Distribution channels opened alongside new innovative products • New management, clean capital structure, new strategy • Massive rise in expected sales and two new product releases Nanomotion – The Infinity DifferenceSmall, silent, precise ceramic servo motors “Infinity’s vision and execution capabilities enabled the paradigm shift in Nanomotion” Jim Dick, JE
Infinity Israel China Fund Investment Strategy • The Infinity Israel China Fund will invest primarily in late stage/pre exit Israeli companies with strong technology IP and grow them into global companies with a China focus. • Sector focus: medical devices, semiconductor, telecom, software, and materials arenas. • Pragmatic exit and return oriented strategywith an activist approach. • Prime investment criteria are quality of management & Infinity’s added value mainly in China.
Why Our China Strategy Wins…. • Alignment of interests - our Chinese partners invest with us both in the Israeli company (minority) and in the Chinese companies (majority). • We operate in China as “Chinese” as opposed to foreigners - the result is significant government support (financial , regulations, customers, first license). • We create value by structuring companies which bring together real businesses and proven technologies at attractive valuations. • We create Chinese IP and get government IP protection. • We have a government ruling enabling the fund to transfer capital in and out of China as needed. • We have the China Development Bank and SIP as our true partners along side top government support. • We already have two exits (Nanomotion- 2X, Shellcase - 2X).
Investment Business Model –Preferred Option A China Partners & Co-Investors Israel China Fund Majority investment Majority investment * Minority investment Minority investment Chinese company Israeli company License Royalties, License fee/shares Exit - Global IPO/M&A Exit – China IPO/M&A * Minority investments in Chinese companies can be direct or conducted via a co-investing fund with Chinese partners
Municipality Area：8,488 sq km City Area：1,649 sq km Total population：6.92 million City population：2.07 million Wu Xi Suzhou Jurisdiction