Investors urged to consider Israeli infrastructure fund

Pinchas “Pinny” Cohen

Pinchas “Pinny” Cohen has been to Toronto before, so he’s got a good idea of the lay of the land when it comes to private equity investments.

Years ago, when he headed his first “big project,” planning Highway 6, Israel’s first toll road, he came to Canada to witness first hand the way Highway 407 was being run. The Canadian-built thoroughfare had a good reputation internationally, as it was the first to calculate and collect fees electronically, without the need for traffic-slowing stations at regular intervals.

It was the first place “I came to see, to meet and to know,” Cohen explained during a recent visit to Toronto.

Aecon, a big player in infrastructure engineering, which upgraded Highway 407, went on to own a one-quarter interest in the Israeli highway. Though that financial connection has ended, Cohen believes Canadians will again be interested in Israeli projects.

During his 2-1/2-day visit last week, he was touting the Israel-based NOY Infrastructure and Energy Fund as an attractive – and lucrative – way for Canadians to invest in Israel.

The fund, he said, is relatively new. It was launched in May 2011 with 570 million shekels ($160 million US), and since then, it has raised another 1.6 billion shekels.  The fund took a 49 per cent stake in Highway 6, a 140-kilometre road that runs more or less from Haifa to Be’er Sheva and bypasses the more congested routes near Tel Aviv. It has been “very profitable,” he said.

That investment has generated between 11 and 13 per cent annual return, while the fund’s other four investments are also doing well.

Noy focuses on Israeli infrastructure projects, which Cohen believes is something that should interest high-worth Canadian investors. Israel is experiencing a growing economy and the country’s infrastructure – its roads, power plants and energy sector – have to be upgraded to keep up, he said.

The government is putting a lot of money into infrastructure and is encouraging public and private partnerships, so the road is open to build upon Noy’s current roster of successful investments, Cohen said.

In addition to Highway 6, Noy has put its money into a light rail system in Israel’s north, it has invested in two substantial solar energy projects, and it is involved in a large “campus” in the Negev Desert for the Israeli military that will be used to train soldiers.

Noy has a couple of crucial selling points, Cohen explained. It already has an impressive list of well-known Israeli investors, including individuals and institutions who have put their money into the fund; its investment team is experienced and respected; and it has a record of successful ventures so far.

According to Ha’aretz, “Along with Pinny Cohen two investment managers with experience in infrastructure were to head the fund as partners: Ran Shelach, a consultant at TASC Strategic Consulting and a former credit manager at Bank Leumi, and Gilad Boshvitz, who had been an investment manager at the Amitim consortium of pension funds and business development manager at Etgal Holdings, a company that develops and manages infrastructure investments. For all three, Noy has provided a new experience.”

Cohen, an attorney by profession, served as CEO of tycoon Lev Leviev’s Africa Israel Investments from 1998 to 2006, as chair of Tshuva Holdings between 2006 and 2009, and in 2009, became a partner in the privately run America Israel real estate firm along with Migdal Group and Israel Discount bank.

Noy itself was created by Poalim Capital Markets, a subsidiary of Israel’s Bank Hapoalim, and Clal Insurance, an arm of IDB  Holdings Group.

Cohen expects the fund will attract mostly Jewish investors in Canada, who already have an affinity for Israel.

Toronto, he said, “has a strong business community with a strong relationship with Israel.”

Investors are being asked to look at long-term investments of more than 10 years, but he expects “people will get a nice return on their money, more than Canadian returns on infrastructure.” He suggests that will be in the 12 to 15 per cent range.

High net worth individuals will be asked to put $1 million or more into the fund; institutions and corporations, $10 million.

Noy is exploring new projects, Cohen said, including a new power station running on natural gas largely extracted from Israeli sources, a desalination plant and a Jerusalem to Tel Aviv “fast lane,” in which motorists pay for the privilege of avoiding traffic.

The desalination project has the added benefit of promoting peace, Cohen stated. Fresh water is a major challenge in the Middle East, and if the supply is increased, fresh water becomes less of an issue in peace negotiations.

But that’s merely an added bonus. For Noy, it’s the quality of the project that counts.

“It’s not a charity,” he stressed. “It’s a good investment opportunity.”