(Bloomberg) – Goldman Sachs Group Inc. has just had its best year in Israel. But the wave of hiring she foresees is both a rebuilding effort and a growth spurt.
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After emerging as the first advisor on initial Israeli public offerings in the United States in 2021, the Wall Street firm plans to double its local staff to around 30 by adding five people to the investment banking division and expanding its teams. asset management and private wealth in Tel Aviv.
Since a recent diplomatic breakthrough that has fostered ties between Israel and four predominantly Muslim countries including the United Arab Emirates, the bank has worked to boost business for Israeli companies in the Gulf and touts the prospect of investment by them. investment fund in the region, according to Jonathan Penkin, the new head of Goldman’s investment bank in Israel.
As Goldman’s presence expands in Israel, it also has to contend with the recent exits of Sarel Eldor and Danny Akerman, two senior bankers who left to set up their own investment fund.
“In a sense, we are rebuilding part of our operations here after the departure of what were important colleagues,” Penkin said in an interview.
At stake is more of the business generated by Israel’s increasingly lucrative tech sector during a windfall of industry-related wealth. Goldman, which retained the # 1 spot in global transactions in 2021, saw its income in Israel reach the highest level on record, not only in investment banking but also in asset management, said Penkin. .
Boom year
Israeli tech companies saw a 520% increase in the value of stock offerings and mergers and acquisitions last year, the total reaching nearly $ 100 billion if follow-up deals are counted, according to PwC .
Goldman has been instrumental in successful deals including the IPO of mobile game company Playtika Holding Corp., which held Israel’s largest all-time listing a year ago, and has been involved. in the IPO of application software company ironSource via a merger that valued the combined company at over $ 11 billion.
Less than three months after his appointment to replace Eldor in Israel, Penkin combines his new role with responsibilities as head of Goldman Sachs International Bank in Johannesburg.
A veteran of the bank for nearly 16 years, he took up his post in South Africa at the end of 2019 after working on the sale of shares in Saudi Aramco, the world’s largest IPO. Penkin, a graduate of the University of Cape Town, was previously Chairman of Goldman’s Asia Ex-Japan Equity Capital Markets Unit.
Goldman is also looking to harness its investment banking prowess in Israel by promoting the country’s businesses across the Middle East. The company has brought potential Gulf investors to Israel, Penkin said, to take advantage of the US-brokered normalization agreements reached by the Jerusalem government in 2020 with the United Arab Emirates, Bahrain, Morocco and Sudan. .
“We hope to be able to provide some of the region’s major sovereign wealth funds and capital providers with opportunities to buy into what we believe will continue to be some of the best investment opportunities in the world, in Israeli companies,” did he declare. .
Even in boom times, challenges abound for the Israeli tech scene.
The industry faces a severe shortage of skilled workers that has led to a “senseless” war for talent and raised wages enough to make companies less competitive with the United States, according to Penkin. A rise in the shekel only increased the financial burden on employers.
The number of Israeli IPOs is expected to decline slightly in the first quarter, before picking up again later in the year, but a “significant and healthy number” of high-quality companies will nonetheless seek to list in the United States this year. year, he said. .
“We expect the markets to be somehow more volatile, and volatility isn’t necessarily the friend of an IPO,” he said.
Many companies that recently went public will need to make acquisitions to maintain the levels of growth they were seeing before their IPO, Penkin said.
While fintech and e-businesses are likely to continue to attract record amounts of money, other tech companies – especially those disrupting traditional industries like healthcare and food – can raise significant capital, according to Penkin.
“The level of activity right now is off the charts,” he said.
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