22 september 2011
Permira funds acquire majority stake in leading smart drip irrigation company Netafim        

Permira, the European private equity firm with global reach, announces today that the Permira funds have agreed to acquire a stake of up to 61 per cent in Netafim Ltd (“Netafim”), the global leader in smart drip and micro irrigation solutions, from the Kibbutzim Hatzerim, Yiftach and Magal and Israeli funds Markstone and Tene. Kibbutz Hatzerim will remain a significant shareholder with Kibbutz Magal also retaining a minority stake. Completion of the acquisition is subject to the customary antitrust conditions. Founded in 1965 in Israel, Netafim provides smart drip and micro irrigation solutions for sustainable agriculture. It has transformed traditional flooding/sprinkler-based irrigation by pioneering an innovative new product using dripper lines providing spiral water passageways through which water flow can be controlled and  delivered directly to the roots of crops, thereby increasing crop yield by up to 50% whilst saving up to 40% in water consumption. The company has also expanded into landscaping, greenhouse projects, and biofuel energy crops such as sugar cane.

For the past ten years Netafim has delivered double digit revenue growth by improving agricultural yield and enabling sustainable food production. Its broad range of product and services address some of today’s key global production challenges including water shortage, land and food scarcity. With more than a 30 percent global market share and a presence in over 100 countries, Netafim is a market leader in a growing  market and continues to target double digit revenue growth in the coming years.  The Permira funds, together with existing shareholders Kibbutzim Hatzerim and Magal, are backing Netafim’s current management to accelerate revenue growth and further expand internationally, especially in emerging markets such as China and South America.

Operating from three production sites in Israel and numerous extrusion lines in different regions, the global business has significant potential to further penetrate existing markets, expand into new geographic regions and extend its product range.

Commenting on the acquisition, Jörg Rockenhäuser, Board member and Head of Germany at Permira, said:“This is another example of an investment by the Permira funds in an innovative and fast-growing global market leader in the agricultural sector. The funds’ recent experience in backing the expansion of crop protection company Arysta LifeScience and animal food specialist Provimi leaves them well positioned to become a partner of choice for Netafim. We are excited to work closely together with founding Kibbutz Hatzerim to further grow the company in the years ahead.”  

Torsten Vogt, Co-Head of Permira’s Industrials team, added: “Drip irrigation is a key technology in helping to address global challenges such as water and food scarcity against a growing global population. The adoption of the technology is in its early stages in large emerging markets and substantial growth opportunities remain. As the pioneer and global market leader in the field, Netafim is uniquely positioned to drive this development. We look forward to supporting the current management team in making Netafim one of the most attractive growth businesses in the agriculture industry.”

Moshe Paul, Chairman of the Kibbutz Hatzerim, said: “As a founding shareholder of Netafim, Hatzerim is proud of what the company has achieved over the last four decades.

It is a privilege to have the Permira funds as our new partner to support the next stage of our development and growth. We believe that this new partnership will bring renewed energy to the company and lead to new ambitions, crops and markets. Permira’s sector experience and global network constitute a great opportunity for Netafim and for us, as partners.” 

Igal Aisenberg, Netafim President & CEO, said:“Netafim is proud to have won the trust of the Permira funds. We firmly believe that an acquisition of a controlling stake by such a prominent fund will help Netafim expand dramatically and further improve its performance and results. Netafim has been and shall continue to be an Israeli and global corporation - active in over 100 countries worldwide and employing approximately 3000 employees in Israel and elsewhere. The new shareholders are long-term investors and committed to the core activities of Netafim, including its plants in Israel, situated in three Kibbutzim: Hatzerim, Magal and Yiftach.”. Igal Aisenberg also noted that Israel Makov, Chairman of Netafim's Board of Directors, has announced that concurrently with the signing of the agreement he is resigning from his position.

In a letter circulated to the Company's employees, Isal Aisenberg stated that "Israel joined Netafim at a difficult period for the Company and we are now parting from him with feelings of gratitude for his support and contribution." 

The Permira funds were advised by JP Morgan (M&A), Zellermayer, Pelossof, Rosovsky, Tsafrir, Toledano & Co and Clifford Chance (Legal).