Fund of funds Green to issue NIS 126m in convertible bonds on TASE tomorrow   The Marker   September 05, 2000       Israeli mogul Yitzhak Tshuva will be hitting the capital market tomorrow, relying on his reputation to raise one of the biggest rounds Tel Aviv has seen of late. Tshuva wants to bring in NIS 126 million for his fund of funds, Green Venture Capital (formerly Green Software Development). Tshuva shot up from relative anonymity into the headlines back in February 1998. In the before picture, he was a real estate developer, albeit with publicly traded companies under his control. In February 1998 he took over the Delek energy group in a surprise move. A month before he had quietly taken over a defunct but still-traded company, Green Software Development (later often, and wrongly, known as “Green Holdings”), for peanuts. In July 1999, he began doing something with it. He used the company to invest - not in startups, but in venture capital funds that invest in startups. In 1999 Green was the share of the year, returning 1,700%. Today Green has holdings in no less than eight venture capital funds. Now Tshuva plans to capitalize on his after picture, as one of the savviest investors on the business scene, to raise more money for Green VC to invest. Green VC will be issuing bonds convertible into shares with the help of an underwriting consortium headed by Israel Brokerage & Investments, Leumi & Co., and Eyal Securities. Institutional investors have already committed to buying 31.3% of the issue. Tshuva will personally be buying another 45%. Earlier this year, Green sought to raise money by issuing stock. But the share’s low market price at the time led Tshuva to change the structure of the offering. Today Green is trading at a market cap of $72 million. The bond issue will significantly increase Green’s commitments. The company was already highly leveraged, bearing short-term loans totaling NIS 530 million at the end of the first half. As for the bonds themselves, they are a new animal on the TASE. They have a very short maturation period, only one year. They are convertible into Green stock at a ratio of 60 bonds to 1 share. As they bear a nominal value of NIS 1, they will be worth it only if Green stock rises above NIS 60. As of this morning Green was trading at NIS 47.5. Tshuva evidently has faith that the bonds will be worth it come September 2001. The bonds are unique from another perspective too: they bear hardly any interest, a mere 0.1%. On the other hand, bond bearers get warrants, convertible into Green shares at NIS 65 per share by September 2002. The exercise of the warrants will bring Green another NIS 136 million. Despite the company's high leverage and the low interest, the issue is evidently alluring and its risk level is apparently considered low. Otherwise it is hard to explain the low commission, a mere 4.3%, demanded by the underwriters. The venture capital funds Green has invested in include the TASE-traded Mofet Israel Technology Fund (50.2%), Inventech (24.9%), Sadot R&D, itself traded on the TASE (15.1%), Marathon Capital Development Fund and Samurai Ventures (28.6% - a deal to be closed within a few weeks), which focuses on Internet ventures. Altogether Green has invested NIS 460 million, and the market value of its holdings has reached 560 million. As said, Green’s current market value stands at $72 million. But a few months ago, Merrill Lynch announced the acquisition of a 10% interest in the company, according to a company value of $100 million. Bank Leumi followed suit.       Back to news list