Orbia’s Netafim sale sparks Fortissimo co-investor bid
Private equity fund seeks local partners to compete for the world leader in precision irrigation.
The private equity fund Fortissimo is preparing to acquire control of irrigation solutions manufacturer Netafim. Calcalist has learned that the fund began approaching local institutional investors late last week to offer them participation in the acquisition through a co-investment model, similar to the structure used when it acquired control of Cellcom.
In May 2024, Fortissimo completed its acquisition of Cellcom for NIS 936 million (approximately $282 million), at a company valuation of NIS 2.6 billion ($660M). In that deal, the fund brought in Migdal Insurance, Bank Leumi, Mizrahi Tefahot Bank, Discount Bank, and the Green Lantern fund as co-investors due to the size of the transaction. Since then, Cellcom’s value has more than doubled and is now trading at NIS 5.5 billion ($1.6B).
Fortissimo, managed by Yuval Cohen, is reaching out to institutional investors both to signal seriousness to Netafim’s current controlling shareholder in Mexico and to demonstrate its capacity to meet the terms of the deal. It also reflects confidence in its ability to surpass two foreign funds competing for the acquisition. Fortissimo is investing from its sixth fund, which raised $1.1 billion and currently has about $500 million available. Acquiring control of Netafim will require an investment of up to $1.2 billion, necessitating leverage or partners.
The appeal to Israeli institutional investors may also indicate Fortissimo’s confidence in acquiring Netafim and outperforming the two foreign bidders. The process is being managed by investment bank Evercore, on behalf of the current controlling shareholder, Orbia, a Mexican company that acquired Netafim in 2017 when it was still called Mexichem.
Fortissimo’s confidence is reportedly bolstered by the close relationships its managers and some senior executives maintain with Kibbutz Hatzerim, which holds 20% of Netafim’s shares. The kibbutz’s support could carry weight with Orbia in determining the sale, assuming the foreign funds’ offers are not significantly higher than Fortissimo’s. Calcalist has learned that Fortissimo executives have met several times with Kibbutz Hatzerim’s senior management, led by Eli Bensimon.
Netafim executives, who traveled to Israel from around the world, presented and will continue to present the company’s data to competing funds. Of the two foreign bidders, one is reportedly showing greater seriousness.
Last week, Calcalist reported that Orbia is in talks to sell Netafim, valuing the company at $1.2–1.5 billion, despite having acquired it at $1.8 billion. This comes against the backdrop of a steep decline in Orbia’s stock, which has dropped approximately 60% over five years, from a market value of $7 billion to $1.7 billion, due in part to $8.6 billion in debt and annual revenues of $7.5 billion. Recent Orbia reports mention intentions to sell assets, without explicitly naming Netafim.
Orbia’s stock jumped 22% following Calcalist’s report but fell 7% two days later. At the time of Netafim’s acquisition, Antonio Carrillo Rule served as Orbia’s CEO; in 2021, he was replaced by American Sameer Baharadwaj. Netafim represents roughly 15% of Orbia’s operations but, like the broader industry, has suffered from high interest rates that have led to a decline in sales.
Netafim is one of Israel’s most prominent global innovators and was the first company in the world to develop drip irrigation. This year, the company celebrates its 60th anniversary. Over time, Netafim has grown into the world’s largest precision irrigation company, with annual sales exceeding $1 billion, compared to $700 million for the second-largest competitor, Rivulis. The company, managed by Gaby Miodownik, employs about 5,500 people and operates in roughly 40 countries through 20 factories.
Fortissimo previously lost to FIMI in the competition for Rivulis, which was then John Deere Water. FIMI recorded hundreds of millions of shekels in profit when it later exited that investment.
