Key Takeaways
- • CVC agreed to buy a 40% minority stake in Israeli camouflage maker Fibrotex from the founding Blum family for about €250mn, according to people familiar with the matter cited by the Financial Times.
- • CVC chose not to issue a press release, disclosing the deal only to investors in its mid-market Catalyst fund, reflecting concern about controversy over investing in Israeli defence.
- • The deal is the largest of five transactions signed through the Catalyst fund; the other four were publicly announced.
- • Fibrotex, based in Petah Tikva, has made camouflage systems for armies and special forces since 1965 and is said to derive most revenue abroad.
- • The investment comes amid heightened European scrutiny of Israel, including a recent UK, France and Canada import ban tied to West Bank settlements, raising LP and employee backlash risk according to an academic observer.
Summary
Private equity group CVC sought to keep quiet its investment in Israeli defence company Fibrotex because of concerns the deal would attract controversy, according to the Financial Times. The Dutch-listed firm has agreed to buy a 40% stake in the camouflage maker from the company's founding Blum family for about €250mn, according to people familiar with the matter. Adi Blum, a veteran of the Israel Defense Forces, will remain invested in the company.
The transaction was led by CVC's German team through its mid-market Catalyst fund, which had been in discussions with Adi Blum for years before the deal was agreed. Unusually, CVC did not announce the investment through a press release and instead informed only fund investors. Sources said the firm wanted to avoid attention given sensitivities around investing in the Israeli defence sector in the current environment. The investor communiqué did not mention that Fibrotex is Israeli, despite its base in Petah Tikva, and instead described it as a global business with operations in the US, Japan and Australia, among others. Sources said most of Fibrotex's revenues are generated abroad.
After the FT approached CVC, the firm acknowledged that Fibrotex has principal locations in Israel and the US and serves a highly international customer base across more than 20 countries. CVC said it was delighted to acquire a minority stake and would support the company's international expansion and innovation amid long-term defence modernisation and growing security requirements. CVC stressed that Fibrotex's products help protect personnel and critical assets by reducing their detectability. Fibrotex did not immediately respond to a request for comment.
The deal is the largest of five transactions signed through the Catalyst fund; the other four, involving a cyber security firm, a prosthetic maker, an online property rental platform and a consulting firm, were announced publicly. Fibrotex has reportedly been marketed by Jefferies at a valuation of about $1bn, according to Israeli newspaper Calcalist, which reported in April.
The investment comes at a sensitive time for European-Israeli relations. The UK, France and Canada recently announced an import ban on goods and some services linked to Israeli settlements in the occupied West Bank, and Israel has grown increasingly isolated over the war in Gaza. Naaguesh Appadu of the M&A Research Centre at Bayes Business School said controversy does not make such an investment inherently wrong but that LP and employee backlash is a genuine risk. Investors have been broadly increasing exposure to defence assets since Russia's full-scale invasion of Ukraine.
The transaction was led by CVC's German team through its mid-market Catalyst fund, which had been in discussions with Adi Blum for years before the deal was agreed. Unusually, CVC did not announce the investment through a press release and instead informed only fund investors. Sources said the firm wanted to avoid attention given sensitivities around investing in the Israeli defence sector in the current environment. The investor communiqué did not mention that Fibrotex is Israeli, despite its base in Petah Tikva, and instead described it as a global business with operations in the US, Japan and Australia, among others. Sources said most of Fibrotex's revenues are generated abroad.
After the FT approached CVC, the firm acknowledged that Fibrotex has principal locations in Israel and the US and serves a highly international customer base across more than 20 countries. CVC said it was delighted to acquire a minority stake and would support the company's international expansion and innovation amid long-term defence modernisation and growing security requirements. CVC stressed that Fibrotex's products help protect personnel and critical assets by reducing their detectability. Fibrotex did not immediately respond to a request for comment.
The deal is the largest of five transactions signed through the Catalyst fund; the other four, involving a cyber security firm, a prosthetic maker, an online property rental platform and a consulting firm, were announced publicly. Fibrotex has reportedly been marketed by Jefferies at a valuation of about $1bn, according to Israeli newspaper Calcalist, which reported in April.
The investment comes at a sensitive time for European-Israeli relations. The UK, France and Canada recently announced an import ban on goods and some services linked to Israeli settlements in the occupied West Bank, and Israel has grown increasingly isolated over the war in Gaza. Naaguesh Appadu of the M&A Research Centre at Bayes Business School said controversy does not make such an investment inherently wrong but that LP and employee backlash is a genuine risk. Investors have been broadly increasing exposure to defence assets since Russia's full-scale invasion of Ukraine.
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