Arbel is a Private Debt & Equity fund focusing on mid- sized Israeli private companies and asset finance. Arbel have raised in excess of 2.5 billion NIS.
Arbel was founded by Amir Hessel and Gabriel Low, and started operating in July 2017. In addition to the founders, the senior team at Arbel includes the Chief Investment Officer Mrs. Vered Karin which most recently managed the Direct Lending and Private Credit Department at Psagot Israel’s largest non-insurance asset manager, Senior Investment Manager Mr. Dave Gal recently the CIO of the Origo Manof Fund, and CFO Elad Chen CPA most recently the Treasurer at Alto Real Estate Funds.
The team enjoys a strong reputation and an outstanding network in the domestic market, developed through years of experience of execution in the targeted space.
While large public bond issuers (lately, and notably, including US-based real estate developers) enjoy attractive pricing in the Israeli bond market, mid-sized enterprises suffer from restricted and expensive access to credit, and virtually no access to equity funding. As of the end of the investment periods of the three 2009-vintage Manof funds (Including the KCPS Manof Fund managed by Mr. Low, and Origo Manof Fund where Mr. Gal was CIO), there are virtually no sophisticated domestic debt providers for corporate or asset finance. Domestic Banks and Insurance firms have fallen dramatically short of covering this space adequately. Capital adequacy regimes (both Basel III and Solvency 2) further limit these players’ ability to operate, leaving an enormous gap in the Israeli credit markets. Equity financing is also a limited and expensive option for mid-sized Israel-related corporations. The limited number of Private Equity firms operating in Israel enjoy low entry-valuations and almost exclusively seek corporate control, often rendering them a poor fit for healthy companies seeking financing and friendly equity.
Arbel is unique in its ability to provide both debt and equity capital. The fund’s focus is sub-100 mm NIS (sub-25 mm USD) transactions. Competition in the target space is scarce due to complexity and the relatively small transaction size for banks and institutional investors, and PE fund’s inability to provide "one stop shop" for both equity and debt financing.
The fund is equipped to (1) structure complex debt + equity transactions (2) execute on opportunities quickly and decisively (3) avoid regulatory constraints and process limitations applicable to Israeli banks and institutional investors (4) make provisions that will improve its ability to "control its fate" in adverse circumstances.
Arbel seeks to structure transactions to "skew" the risk / return profile in its favor. Its friendly equity investments will include inter alia minority protections, long-term put options, preferred shares, convertible securities, ratchet protection and other forms of financial structuring. Credit extended for asset finance, corporate finance and in M&A/LBO transactions, may be deployed across the capital structure (unitranche, mezzanine etc.), coupled with profit-participation or various forms of equity kickers, geared to achieve the best excess return for risk. Arbel may further leverage transactions by bringing in private co-investors.
Arbel is Unique
There are virtually no other funds in Israel that have the full flexibility invest across the entire debt – equity spectrum; focus on transaction size of 8-50 mm USD; are led by hands-on &highly experienced founders. Arbel goes to where capital is expensive to Issuers and competition is scarce. Arbel seeks to structure transactions with “skewed” risk-return to favor its partners.
Quality, Risk & Return
Each transaction is led hands-on by one of the founding partners. The methodology deployed begins with investment analysis focus on potential loss, in normal and extreme cases since in the sophisticated credit space “not losing” is the first step to “winning”. This is followed by return and profit analysis, and appraisal of Arbel's ability to add value and reach the best possible return per risk. Opportunities are evaluated at both at the transaction and portfolio level and are managed to Exit by the responsible founding partner.