Zvika Barinboim and Yiffi Gurani, one of the controlling owners of the general partner, will waive management fees and the payments due to them according to the partnership agreement, in the amount of approximately NIS 3 million, and will provide a similar amount for the benefit of the partnership.
About a week ago we wrote that Zvika Barinboim’s magic did not help to significantly write off value in Menara Ventures, and now the public R&D partnership controlled by Barinboim and Yiffi Gurani (who together own about 31% of the partnership’s units) has decided to promote a process of realizing and liquidating its investments (Run Off) within three years, and the distribution of the proceeds resulting from the exercise process to the owners of the participation units.
The audit committee and the board of directors of the general partner examined the alternative of the realization outline and the liquidation of its investments in relation to other alternatives, including raising capital by means of a rights issue. The board of directors came to the conclusion that in light of the state of the financial markets and “in light of the fact that there is a significant market failure in the pricing of the public R&D partnerships”, as well as out of “responsibility towards the owners of the participation units” – it is better to promote the alternative of realizing the investments.
According to the proposed outline, the partnership will stop investing in new projects, will improve the existing projects, will act as stated to sell them within a period of about three years, will significantly reduce its current expenses and will distribute to the owners of the units the cost of the investment and the remaining profit that will be left in its hands, after reimbursement of various expenses as stipulated in outline In addition, it was defined in the outline that during the realization period, after each realization of holdings in the portfolio company, 80% of the balance of the flow for distribution from the conversions will be distributed to the owners of the participation units, and at the end of the aforementioned period, all the remaining profit will be distributed to the owners of the participation units.
At the end of this period, the partnership will cease to exist without liquidation procedures. The partnership’s assessment is that in the five portfolio companies in which it has invested, there is a potential for overflowing value, so that the total realization of these holdings in the said period may cumulatively yield a significant return for the owners of the participation units. The partnership stated that against this outline stood the alternative of continuing to operate the partnership, and continuing to inject capital into it through various fundraisings, and mainly by way of issuing rights. This alternative was found to be less preferable in the eyes of the audit committee and the board of directors, as it is expected to reflect a discount on the market price (which is lower than the issue price) and dilute in an uneconomical way the owners of participation units who will not participate in the rights issue.
As part of the outline, the controlling owners of the partnership’s general partner, Zvika Barinboim and chairman Yiffi Gurani, will set up a credit line of approximately 3 million shekels for the ongoing financing of the operation of the partnership during the three years in which the investments may be realized, which also includes management fees for the general partner in the amount of About NIS 585 thousand (including VAT) for the second half for 2022 that have not yet been paid to the general partner. Furthermore, as part of the outline, the controlling owners of the general partner will waive the management fees and payments due to them according to the partnership agreement (except for initiation fees), an amount estimated at approximately 3 million additional shekels throughout the investment realization period.
This is the first partnership among 14 of the partnerships traded on the Tel Aviv Stock Exchange to break up, which may pave the way for other partnerships to follow the path of Manara Ventures, which claims a failure in the pricing of the partnerships on the stock exchange.
So far Manara Ventures has invested in five companies:
1. The company Revuze, which establishes itself as the data company that holds information and analyzed business insights based on the opinions of surfers. During the month of October and despite the market conditions, the company completed a fundraising round of 12 million dollars from an American fund, according to a company value higher than that stipulated in the SAFE agreement with the partnership. The recruitment is aimed at accelerating sales, continuing product development and increasing the team in Israel and abroad.
2. The company SensePass, which provides retailers with payment solutions for online purchases, last September completed a $2.5 million fundraising led by the partnership, when the partnership invested an amount of $1.5 million in this fundraising round. Senspas signed with another investor on a complementary investment, after the closing of the partnership investment. The main business focus is currently on direct and indirect sales to American customers. Senspas is in partnership with large international companies in the field of payments, among them PayPal, Klarna, Venmo, as well as in the process of building additional partnerships.
3. The company Matics (Matics) develops technology for the digitization of the production floor in the traditional industry. Matix expanded the last fundraising round led by the partnership, and raised an additional amount from a new strategic investor as well as from some of the existing investors. Manara explains that Matix is growing in terms of sales to new customers in Israel and the world and is expanding its activities with existing customers.
4. The company LeO – Chief of Stuff, Inc. (“Leo”) sells tools that help streamline the work of sales agents, find new opportunities and increase sales. Lau has a strategic partnership with the American Vertafore, which holds a market share of about 40% of the insurance agents in the US. Lau is in the process of building a partnership with another American company in the field, as well as with other partners who are marketing and business development channels for the American market.
5. The Pairzon company that developed a technology for the retail world that significantly improves the return on marketing expenses (ROI) of retailers and helps increase sales at the points of sale in the physical store. Pearson continues to grow in the volume of sales and the number of new customers and focuses its activities on marketing and sales in the USA directly as well as with the help of partners.