Temasek in Talks for Irrigation Company Rivulis

Calcalist first reported in August that controlling shareholder FIMI was looking to sell Rivulis and that it had hired Goldman Sachs to do so

Golan Hazani 09:0315.01.20
Singapore's government holding company Temasek Holdings is in talks to acquire Israel-based micro irrigation company Rivulis Irrigation Ltd., according to two people familiar with the matter who spoke to Calcalist on condition of anonymity. Temasek and Rivulis’ controlling shareholder, Israel-based private equity firm FIMI Opportunity Funds, have yet to agree on a price, but FIMI is asking for between $400 million and $500 million, the people said, adding that Temasek is already conducting a due diligence process for Rivulis. While there are two other interested parties, FIMI is currently negotiating solely with Temasek, the people said.


Approached for comment, a Temasek spokesman told Calcalist that as a matter of policy, the company does not comment on market speculation and rumors.


Temasek chairman 	Lim Boon Heng. Photo: Chris Jackson/Getty  Images Temasek chairman Lim Boon Heng. Photo: Chris Jackson/Getty Images



Calcalist first reported in August that FIMI was looking to sell Rivulis and that it had hired Goldman Sachs to do so. Calcalist reported at the time that the early stage negotiations were being held mainly with foreign funds and that FIMI and its partners wanted between $500 million and $550 million for the company. Rivulis’ sales in 2019 are estimated at around $400 million, while its EBITDA is estimated at between $35 million and $40 million.


In 2018, Goldman Sachs headlined the sale of 80% of Israeli drip-irrigation pioneer Netafim Ltd. to Mexico-based pipes and chemicals company Mexichem SAB de CV according to a company valuation of $1.895 billion. Temasek was one of the contenders for the company and seemed like the leading bidder until shortly before the deal was closed. To date, Temasek invested mostly in tech startups in Israel.


Netafim was sold at an EBITDA multiple of 14.8, but it is doubtful Rivulis will fetch a similar price, both because it is not a market leader like Netafim was and because, like all plastic-based companies, it is suffering from the recent steep jump in raw material prices. As a company with both manufacturing and research and development operations in Israel, it is also affected by the strong appreciation of the shekel. The company has also seen very slow growth over the past two years, though it has been presenting more optimistic forecasts for 2020, according to the two people familiar with the matter.


Rivulis employs 1,800 people across 17 facilities, 300 of them in Israel. The company’s main markets are Turkey, Greece and the Balkans, the U.S., Mexico, Brazil, and Argentina. In its sector, it is considered a solid company but one that requires some changes to become a leading one.


FIMI, founded and headed by Ishay Davidi, is Israel’s largest private equity fund. Since its establishment, it acquired control in 90 companies but to date has sold 60 of them. Currently it holds stakes in 30 companies, which between them have 50 facilities in Israel and over 10 global subsidiaries. FIMI raised six funds since its establishment and has $5.5 billion in assets under management.


Temasek, founded in 1974, has some $232 billion in assets under management. Its investments span a multitude of domains, including financial services, real estate, telecommunication, transportation, energy, and agriculture. In 2019, the company reported revenues of $85 billion, up 7% from 2018. Its net income in 2019 was $8.8 billion, a 45% drop year-over-year.