News Analysis – July 2018

General News Summary

Headed for Confrontation?

Despite reports of a cease-fire brokered by foreign elements including the Egyptians, signs mounted that the Hamas rulers of Gaza were headed for a major confrontation with Israel in mid-July. After a weekend that saw the heaviest exchanges of fire since 2014’s Operation Protective Edge, Israel’s security cabinet ordered the IDF to intensify its response to the launching of incendiary kites and balloons that caused massive fires along the Israeli side of the Gaza border and that Iron Dome missile defense systems be deployed in the center of the country and a limited number of army reservists involved in air defense be mobilized. The new orders come in response to continued attacks from the Gaza side of the frontier.

The balloons and kites, which have incendiary devices attached to them, together with mass demonstrations along the Gaza side of the border fence, represent a new tactic employed by Hamas since late spring. They came after previous methods seem to have become less effective: Iron Dome has reduced, though not eliminated, much of the danger posed by mortar and rocket fire, and development of what seems to be an effective system to deal with “terror tunnels” dug under the frontier, with a system that detects underground activity and blocks attacks on military forces and communities before they get started.

The raised level of tension comes against the background of the deterioration of already severe humanitarian conditions in Gaza. Some examples, as cited by the Times of Israel online newspaper: Gaza gets only four hours of electricity per day. Ice cream and cold water are in short supply due to insufficient power. Generator-powered elevators in high-rise buildings only operate on the hour. 97% of the water that flows through the pipes only once every five days is undrinkable. Almost every home in Gaza has a device for filtering and improving the water that comes from the faucets. According to one assessment, conditions in Gaza are too severe and Hamas leadership is willing to put its population at extreme risks to change the situation.

Some Israeli media sources suggest that one trigger for the latest escalation was the decision by Israel in general and Defense Minister Avigdor Lieberman in particular to close the Kerem Shalom border crossing, main entry point for commercial goods into the Strip. Others suggest the ignition point came in a July 13 grenade attack in which an Israeli officer was wounded. The move came in the wake of complaints by residents of Israeli communities just outside the Strip about the environmental and agricultural damage, and the disruption to their lives, caused by the endless stream of incendiary kites and balloons. Humanitarian aid and essential supplies still enter Gaza through the crossing-point.

Aiming for the Moon

If all goes according to plans unveiled in early July, an Israeli-built unmanned spacecraft will land on the Moon on February 13, 2019, making Israel the fourth nation (after the U.S., Russia and China) to have landed a spacecraft on the lunar surface. SpaceIL, a spider-like spacecraft weighing just 600 kg, is due to be launched from Cape Canaveral in Florida aboard a SpaceX Falcon 9 rocket, sometime in December, taking an elliptical route to reach the Moon for a fully automated landing two months later.

SpaceIL, developed by Israel Aerospace Industries for SpaceIL, founded seven years ago as part of a Google contest to develop a lunar vehicle, is due to make the first privately funded lunar landing. Its main supporter is Morris Kahn, best known as the founder of Amdocs, the Israeli-based international business management technology firm. According to SpaceIL officials, the Israeli government has made a still-pending promise to fund 10% of the project’s total cost.

Emerging Syrian Deal

Israel is a key player in the deal over Syria likely to emerge from the mid-July meeting between Presidents Donald Trump of the United States and Vladimir Putin of Russia. In this context, Benjamin Netanyahu’s visit to Moscow was far from a coincidence. According to media reports, which inevitably involve some measure of speculation, Netanyahu gave tacit acceptance to the survival of Bashar al-Assad’s regime in Syria in exchange for Russian assurances that it will limit the Iranian presence in Israel’s northern border, particularly near the border with the Golan Heights.

Promises of this kind are made to be broken, but there are reasons that in this case they’re likely to be kept, at least for a while. Putin’s overriding interest is the survival, after seven or more years of bloody civil war, of his client Assad. Netanyahu, for his part, has reasons to agree, not from any love of Assad, but rather for the lack of any more palatable alternative. The Israeli leader is well aware of Putin’s limitations: It’s unreasonable to expect the Russian leader to effect a full Iranian withdrawal. Iran and its pro-Iranian militias, most notably the Lebanese Hizballah, over the years have established bases and entrenched themselves over broad areas of Syrian territory, stretching from the Iraqi border in the east to the Damascus area and into Lebanon in the west.

Netanyahu acknowledged his priorities while speaking to the press on his flight home from Moscow. “We did not have a problem with the Assad regime for 40 years,” he said. “Not one bullet was fired on the Golan Heights. What bothered us in the beginning was Islamic State and afterward Iran and Hizballah were brought (near Israel’s northern border). We will not accept Iran on our border, or anywhere else in Syria.

Israel has other priorities as well, Iranian missiles deployed in Syria, which it perceives as a direct threat to its security; Assad’s observance of the 1974 Separation of Forces agreement along the Golan Heights border, and maintaining its freedom of action that serves to limit Iranian entrenchment and keep Iranian forces out of the border area.

Assurances aside, tensions remain high in Israel’s North, and Israel reserves the right to strike back against anything it perceives as a threat to its security. In fact, the first half of July was marked by several instances of strike and counter-strike, the most notable of which were the shooting down, by an Israeli Patriot missile, of a presumably Syrian unmanned aerial vehicle that had penetrated Israeli airspace, and Israeli retaliatory strikes on Syrian army positions, followed by interception of a second UAV and yet more retaliation a few days later.

Details of a possible agreement between Presidents Trump and Putin remain unclear and no matter what the two powers agree on, there’s always the potential of unintended sudden escalation, say after Iran delivers on its promise of retaliation for the alleged Israeli attack in April on the T-4 (Tiyas) air base near Palmyra, in which a number of senior Iranian operatives were killed.

Drought Help Offered Iran

Despite hostility between the two countries, Prime Minister Benjamin Netanyahu offered to assist water-short Iran with Israeli technologies. Netanyahu made the offer, to which there was no response, in a video posted on the Internet in mid-June, declaring his commitment to saving the lives of Iranian citizens who are victims of “a cruel and tyrannical regime that denies them vital water.” Netanyahu said that nearly 96% of Iran is currently suffering from some degree of drought and that 50 million Iranian citizens could be driven out of their homes due to environmental changes. “Israel has the know-how to prevent an environmental catastrophe in Iran. I want to share this information with the people of Iran,” he said. “Sadly, Iran bans Israelis from visiting.”

Azeri Ties

In mid-May, at a time when the Islamic world was in an uproar over the inauguration of the U.S. Embassy in Jerusalem, a high-level delegation from Azerbaijan, led by its tax minister and included several deputy ministers, spent three days discussing ways to promote commercial, scientific and cultural ties between Israel and the Azeri Republic which shares a common border with Iran.

Relations between the two countries include the supply of Azeri oil which Israel obtains via Turkey, and Baku’s current and contracted purchase of Israeli military systems, which Azeri President Ilham Aliyev says amounts to about $5B. Baku is said to be interested in purchasing Israel’s Iron Dome missile defense system.

In addition, Israel supplies Azerbaijan with high-tech, agriculture and medical supplies, and the Central Asian country has a long-standing Jewish community.

India’s Advantage

India has undergone radical economic change in the past decade, and is on the brink of becoming a start-up nation, says Salil Singhal, former chairman of PI Industries, India’s agrotechnology giant. On a May visit to Israel, Singhal was inducted into Tel Aviv University‘s International Board of Governors. He predicted that as the West produces less food, India will profit from serving as its breadbasket.

Air India Expanding Flights

Encouraged by an 80% occupancy rate, Air India reportedly plans to expand its service on the Tel Aviv-Delhi route from three times a week to daily. The three times a week service was introduced in March, making history by flying directly to Israel over Saudi Arabia, which granted permission for the first time for overflights to and from Israel.

TV Merger

Two of Israel’s three commercial TV channels have signed a merger agreement. Both Reshet (Channel 13) and Channel 10 have been sustaining large monthly losses. According to Globes business daily, Reshet, whose principal owners are Udi Angel and Idan Ofer, will hold 60% of the merged company, with Channel 10’s Len Blavatnik, the Recanati family and Aviv Giladi owning the remainder. The merger plan is subject to approval by the Israel Antitrust Authority.

The Economy

Flug Stepping Down

Bank of Israel Governor Karnit Flug has announced that she will step down at the end of her term in November. Flug, the first woman to head Israel’s Central Bank, replaced Stanley Fischer in 2013. The resignation was expected since April, when the Bank of Israel released a report highly critical of Finance Minister Moshe Kahlon’s pet housing project, and Kahlon announced that there would be a search for a new governor. Flug criticized Kahlon’s tax-cut policy, arguing that budget surpluses should instead be spent on infrastructure improvements, education and social services.

Inflation Projection

Israel’s rate of inflation will remain at below 2% per annum until after 2022, according to Ministry of Finance projections released in early June. At the same time, the ministry raised its growth prediction for 2018 from 3.2%% to 3.5% due to positive developments in exports, private consumption and investment.

OECD Praise

A report presented to Prime Minister Netanyahu by the Organization for Economic Cooperation and Development (OECD) praised the Israeli government for its efforts to reduce the burden of regulation and measuring the effect of new regulatory frameworks on the economy. Calling these praiseworthy measures only a start, the report cited the need for government ministries to improve coordination with regulators, noting that regulation is still very rigid due to a desire to avoid risks.

Gas in Gaza

The Palestinian Authority will attempt to develop Gaza Marine, the natural gas reservoir of the Gaza Strip coast, by itself but with some help in transmitting the gas from Israel. According to a report in Globes, the PA is currently discussing use of the Israeli gas infrastructure with Israeli authorities and development of the field with an international drilling firm.

Gas from the reservoir will fuel the Gaza power station and another to be built in Jenin, on the West Bank. The PA is also looking for other customers to justify development of the field. Rights to the field are held by the Palestinian Investment Fund (PIF), the PA’s investment arm, and CCC, a Greek-Lebanese company controlled by the Khoury family. The Palestinians plan to connect the reservoir to the coast using facilities in the Ashkelon area and the Israeli pipeline to transmit gas to Jenin.

Progress in negotiations over development of the field, though, is far from guaranteed. According to Globes, talks with Energean, the Greek drilling company, are likely to break off if current tensions deteriorate into a full-scale military confrontation between Gaza’s Hamas rulers and Israel.

Eni Denies Gas Find

Eni, the Italian energy giant, has denied a Reuters report of a huge gas discovery in Egyptian territorial waters. The news agency said in early July that Eni was set to announce a new gas find of 2,550 billion cubic meters in the Noor field off the northern Sinai coast. Such an amount would make it three times larger than the nearby Zohr gas field and five times larger than Israel’s Leviathan gas field.

Fiat Includes Waze

Fiat Chrysler Automobiles has unveiled a new car, Fiat Panda Waze, featuring a built-in Waze navigation system. The Panda Waze is the first car to be named after the Israeli navigation app, which was bought by Google in 2013 in a deal worth $1.3B and has more than 100 million users worldwide. Waze is integrated with the Panda Uconnect informatics system. A Fiat statement says: “Waze is much more than just a navigator: it avoids traffic, it guides you to the service station and it even reminds you where you parked.”

VW Head Visits

Herbert Diess, the newly named CEO of Volkswagen, visited Konnect, the new innovation and scouting campus opened by German automaker in Tel Aviv, during a mid-June visit to Israel. Diess also met with Prime Minister Netanyahu, discussed self-driving cars with Mobileye founder Prof. Amnon Shashua, and met the head of Gett, the taxi-hailing firm in which VW recently invested.

India Agreement

Israeli companies will provide India with medical imaging technology, industrial waste systems, methods of combating the fruit fly and other technologies as part of the Israel-India Bridge to Innovation agreed on during Indian Prime Minister Narendra Modi’s visit to Israel in July 2017. Six Israel start-ups selected by the Israel Innovation Authority are due to launch pilot projects; Amaizz, developer of a portable drying device for storage of agricultural produce, Biofeed, which has developed a device to combat fruit flies, Zebra Medical, a specialist in medical imaging, MobileODT, developer of developed devices to diagnose cervical cancer, water treatment specialist Aquallence, AMS Technologies, developer of a system to filter industrial water.

India Trade Potential

Representatives of more than 160 Israeli companies trading with India attended a mid-June Tel Aviv conference organized by the Israel Export and International Cooperation Institute. Speaking to the Israel Today newspaper, Export Institute deputy CEO Shaul Katznelson noted that Israel was not realizing the potential for trade with the Subcontinent, which accounts for about 15% of the total world economy. By doing the right things, he added, Israel can triple the $1.05B in annual exports to India, most of which are in the defense and security field.

Ofo Leaving

Ofo, the Chinese bicycle-rental giant, is leaving Israel after conducting pilot projects in Ramat Gan near Tel Aviv and at Bar-Ilan University. The company, which will donate its bicycles to the Ramat Gan Municipality, reportedly has decided to drop the Middle Eastern countries and concentrate on operations in other regions. Founded in 2014, Ofo maintains about 10 million bicycles in 250 cities around the world.

Seko Logistics Coming to Israel 

Seko Logistics, an international giant in ecommerce transportation, forwarding and delivery, is coming to Israel. According to Yediot Aharonot, the Chicago-headquartered company, which has 120 branches in 40 countries and annual revenues of about $750M, is responding to Israel’s relatively high number of purchases per capita over the Internet. The report adds that another leader in the field of cargo logistics, German-owned Hermes, which operates largely in Europe, is due to start operations in Israel in the near future.

Finance & Investment

Big Deals Affect Exit Average

Two deals worth more than $1B each pushed total Israeli high-tech exits in the first half of 2018 to $6.22B and the average of all 58 exits to just over $30M without which average proceeds from exits would have fallen below the average for two of the preceding three years. KLA-Tencor‘s $3.4B acquisition of Orbotech, the Israeli automated inspection specialist, and Permira‘s $1B purchase of video management firm NDS from Cisco Systems brought in a total of $4.4B, compared to the $1.8B total of the remaining.

Bond Market Attractive

The Tel Aviv Stock Exchange bond market is attracting American investors, particularly in the real estate field, according to a report in Calcalist, Yediot Aharonot economic supplement. The paper said that 34 American entrepreneurs raised over $6.5B in recent years in Israel, including real estate developer Stephen Ross (owner of the Miami Dolphins NFL team), whose company raised around $221M in 2015; New York-headquartered real estate agency Moinian Group, which raised $361M in 2015; and Jeff Sutton’s Wharton Properties, which raised $233M in 2017. The World Federation of Exchanges says the TASE last year was in fourth place in terms of total bond trading value, at an annual $205B.

TASE, Singapore Exchange Cooperate

The Tel Aviv Stock Exchange and the Singapore Exchange have announced a plan for joint listing in raising capital and support for companies in the technology and healthcare fields. The two exchanges will pro-actively engage with technology companies seeking to penetrate Asian markets and to list on both exchanges. This will include assisting companies during the pre-listing stage, facilitating the listing process, and providing issuers with post-listing support by leveraging the exchanges’ network and platforms.

Czech Israel Fund

Benson Oak, a Czech-European investment firm, says it plans to raise $100M for its new venture capital fund investing in seed-stage Israeli start-ups.

83North Profits from Swedish Sale 

83North, a fund investing in Israeli and European companies, registered a $140M profit from the late-May $42.2B sale of Swedish firm iZettle to PayPal. Formerly known as Greylock IL, 83North has offices in Herziliya and London and was one of the early investors in iZettle, which has developed a miniature credit card reader enabling small retailers to use cellphones as payment terminals.

Samsung Eyes Israel Investments

Samsung‘s newly established fund specializing in artificial intelligence is already eyeing several Israeli start-ups, according to a report in Yediot Aharonot. The Korean electronics giant’s Qfund, established in late spring, is working through the offices of Samsung Next, its international investment fund, which has offices in California, New York, Berlin and Tel Aviv.

U.S. Move

Next Insurance, an Israeli online insurer for small businesses, says it has raised $83M to finance expansion as a full-service carrier in the U.S. The company has headquarters in Palo Alto, California and an R&D center in Israel. It was founded two years ago by Guy Goldstein, Nissim Tapiro and Aloni Huri, serial entrepreneurs who previously sold Check, a cellphone payment start-up, to Intuit for $360M.

Mergers & Acquisitions

Saidoff Buys Arison Stake in Shikun & Binui

Naty Saidoff, an Israeli who made his fortune in diamonds and New York real estate, is purchasing Shari Arison’s 47% stake in Shikun & Binui Holdings, an Israeli construction and real estate company, for NIS 1B. Saidoff, who was seeking a major Israeli investment for some time, in the past was unsuccessful in attempts to purchase Jerusalem Economy Ltd. and Africa Israel Investments, and earlier this year, withdrew an offer to purchase financially and legally troubled Eurocom, controlled by businessman Shaul Elovich.

Fimi Acquires Bird Aero Stake

Fimi, the Israel private equity fund managed by Ishay David, has acquired a 50% stake in Bird Aerosystems for $40M. Based in Herziliya north of Tel Aviv, Bird Aerosystems is a leading global provider of airborne missile-protection and surveillance systems, and provides aviation logistics solutions to commercial and governmental bodies. Bird’s founders Ronen Factor, David Dragucki and Zahi Ben-Ari served in the Israel Air Force as pilots and senior program managers.

Qualitest Buys Orasi Division

QualiTest, the world’s largest software testing company, is acquiring the software testing division of Orasi for an estimated $10M. Qualitest’s headquarters are in Petah Tikva, just outside Tel Aviv; Orasi is headquartered in Kennesaw, Georgia, and in North Carolina, U.S. QualiTest, which has an annual turnover of about $240M and expects that volume to reach $400-500M by 2020.

QualiTest also acquired the testing division of NCC, a UK-based specialist and provider of tailored solutions in software testing, quality assurance and test consultancy.

Coolisys-Enertec

Coolisys Technologies, a subsidiary of California-based DPW Holdings, has completed the acquisition of Enertec Systems, Israel’s largest developer of specialized electronic systems for the defense and aerospace markets. Enertec, located in Karmiel in northern Israel, provides multi-purpose turnkey systems designed to serve in harsh environments and battlefield conditions, including mission computers, missiles launchers, command and control systems, automatic testing systems and power supply systems for integration into land and naval combat electronic systems, command and control centers, simulators and missiles systems. Purchase price was not disclosed.

Pangea-Nip Global

Pangea Group, an Israel-based construction and engineering firm, is purchasing NIP Global for about $30M, according to a report in Calcalist. NIP, which specializes in biometric and digital systems for population registry, has headquarters in Herzliya, just north of Tel Aviv.

Delek Automotive-Verdis

Israel’s Delek Automotive has completed acquisition of Verdis, an Israeli company dealing with environment, desalination and energy solutions. The sale price of NIS 992M reflects a valuation of NIS 1.4B for Verdis, which was founded in 1992 in Israel by Veolia, the French company, and Israeli businessman Udi Starkman. Its name was changed to Verdis after its acquisition, in 2015, by Oaktree for $450M.

Abinbev-Weissbeerger

Anheuser-Busch InBev, the world’s largest brewer of beer, has acquired Tel Aviv-based beverage consumption analytics firm WeissBeerger for an undisclosed sum. Estimated in the tens of millions of dollars, according to press reports, WeissBerger is due to become the Israeli R&D center for the brewer. Anheuser-Busch InBev, based in Belgium, is 2008 merger of Interbrew, a Belgian brewer, with Brazil’s AmBev and American brewer Anheuser-Busch.

IDE Takes Over Sorek Plant

IDE Technologies, the Israeli desalination specialist, has exercised its option to purchase the remaining 49% equity in the Sorek plant, Israel’s largest desalination facility, for NIS 195M. Israel’s largest desalination facility, Sorek was completed in 2013 and now produces 150 million cubic meters of purified water annually. Israel currently has five desalination plants: Ashkelon, Palmachim, Hadera, Ashdod, and Sorek, delivering a total of 585 million cubic meters a year to the National Water Carrier. Desalinated water production is targeted at 1,100 cubic meters by 2030.

Salesforce-Datorama 

American customer service giant Salesforce has signed a definitive agreement to purchase Datorama, an Israeli start-up specializing in artificial intelligence-based marketing analytics software. Purchase price was not disclosed, but media reports put it within the $800-$850M range, making it 2018’s third-largest Israeli exit. Datorama was founded six years ago by Israeli entrepreneurs Ran Sarig, Katrin Ribant and Efi Cohen. With headquarters in New York, an R&D center in Tel Aviv and offices in 16 cities around the world, Datorama says the deal will benefit its more than 3,000 customers, including some of the world’s leading brands.

Science & High Technology

Israeli Tech in Thai Rescue

Technology developed by Maxtech Networks, developer of communications technology that does not depend on network infrastructure, was instrumental in efforts to rescue a boys football team trapped in a flooded cave in Thailand in early July. After initial rescue attempts were hampered by the fact that conventional communications systems were ineffective in the flooded caves, Thai Special Forces approached Maxtech, based in Yavne southeast of Tel Aviv, for help. The company dispatched an engineer to join the rescue team, bringing with him 17 of the firm’s Max-Mesh radio units, which unlike other communications systems do not require direct line of sight to operate. Maxtech technology was used in Israel, India and Italy in defense, security and aerospace.

Audi Teams With Stratasys

Audi, the German automaker, is introducing 3D printers made by Israel’s Stratasys Inc. into its Pre-Series Center in Ingolstadt, which builds physical models and prototypes for the evaluation of new designs and concepts in its automobiles. The Rehovot-based Stratasys J750 multi-material printer is expected to accelerate design verification on some items by as much as 50%.

Hyundai Teams With Autotalks

Hyundai, the South Korean automaker, has teamed with Autotalks, an Israeli provider of Vehicle-to-Everything (V2X) technology for improving highway safety. Size of the investment was not announced, but industry sources put it at several million dollars. Located in Kfar Netter, a moshav not far from Netanya, Autotalks has developed non-line-of-sight sensors that work in all environments and weather conditions, providing information to drivers in manned vehicles and complementing existing sensors in autonomous vehicles.

SEAT Drives In Too

SEAT, the Spanish automaker, says it is joining other international car manufacturers in a search for Israeli technology. In late June, the company said it was considering eight Israeli tech companies for potential partnerships, after exploring more than 100 mobility start-ups as part of its XPLORA R&D initiative. SEAT did not name its potential partners.

Science Ministers’ Conference

Science Minister Ofir Akunis hosted delegations from about 20 countries at what was billed as the first ever international conference of science ministers and their deputies. Among the delegations attending the meetings in Jerusalem in late May were groups from Britain, Argentina, Poland, Thailand, Kenya, Uganda, Spain and the Czech Republic.

Solar Presence

Nine Israeli companies exhibited their advanced technologies at InterSolar, the international energy conference held in Munich in late June – Air Touch (robotic cleaning of solar panels), Apollo Power (photovoltaic wallpaper), LoriSense (tracking for solar panels), PVPredict (generating prediction), RAYcatch (AI energy diagnostics), SolAround (photovoltaic cell technology), Solight (solar-based lighting systems), Solview (solar potential analytics), and Sunbertec (renewable energy grid solutions).

Wind Turbine Funds

Enlight Renewable Energy, with headquarters in Rosh Ha’ayin northeast of Tel Aviv, says it has reached a funding agreement to finance development of an electricity-generating wind turbine farm at the Valley of Tears on the Golan Heights. Construction of the facility, financed by a consortium including Bank Hapoalim, Harel Insurance and Phoenix Holdings, is due to start this summer. The project will use 30 General Electric turbines to generate 96 MW, equivalent to the electricity consumption of 40,000 average households in Israel. Revenue from sales of electricity from the project is projected to reach NIS 100-110M annually for the 20-year license period. Total cost of the project is an estimated NIS 660M.

Screenz Links with Jio

Tel Aviv-based Screenz has signed an exclusive partnership for the India market with Reliance Jio Infocom, India’s third largest mobile provider. The pact gives Jio, India’s largest games provider, with multiple interactive advertising and marketing options. Screenz developed a SaaS platform enabling personal contact between professional content creators and mass audiences, utilizing real-time big data analysis to map each user’s “Entertainment DNA.”

Quantum Initiative

Israel plans to allocate tens of millions of dollars to develop quantum computing technology. According to a report in Globes, the Prime Minister’s Office is set to allocate about $80M for the project, including development of a quantum computer by the Technion Institute of Technology in Haifa and allocations to the Weizmann Institute of Science in Rehovot.

Cognata, Audi Team Up

Audi, the German automaker, has selected Cognata, an Israeli artificial intelligence (AI) specialist based in Nes Tziona southeast of Tel Aviv, as its partner in autonomous vehicle simulation. Cognata creates realistic simulation environments using AI, deep learning and computer simulation to recreate traffic models of cities from around the world.

Intel Unit and Food Tech

The Israel Defense Forces legendary intelligence Unit 8200 is collaborating with the Economy Ministry and a Jerusalem-based venture capital fund in a unique effort to establish a center for food technology research at Kiryat Shmona, near the Lebanese border. The move, for which the government has allocated $27M, is part of a plan to set up seven dedicated high-tech accelerator hubs in various parts of the country’s periphery. The collaboration was announced in early June by Erel Margalit, founder and current chairman of Jerusalem Venture Partners who resigned from the Knesset and left politics in 2017.

Chinese-Merck Incubator

WuXi AppTec Group, a Shanghai-based pharmaceutical company, and Europe’s Merck Serono, are partners in a new biotech start-up incubator that was established in Yavne, southeast of Tel Aviv. Israeli businessman Mori Arkin and life sciences-focused venture capital fund Pontifax Ltd. are also part of the venture. The incubator, called Explore Bio, reportedly has already invested in several Israeli firms.

Cannabis Company

InnoCan Pharma, a new cannabis-based drug company founded by a former Teva Pharmaceutical Industries subsidiary CEO, plans to raise development capital through a new crowdfunding mechanism that allows investors to buy shares in a company rather than in the company’s product. Founder Ron Mayron, a former head of Teva’s Israel subsidiary, says InnoCan will specialize in skincare drugs combining conventional pharmaceuticals with substances derived from the cannabis plant. InnoCan intends to seek approval as a recognized drug through a shortened track designed for over-the-counter drug products.

Chinese Agreement

Nano Dimension, a provider of 3D printers for the electronics industry, is entering the Chinese market after signing an agreement with that country’s Aurora Group. Aroura will market and sell Nes Tziona-based Nano Dimension’s DragonFly 2020 Pro 3D printer (average price around $200,000) for electronics to customers in China.

Aerospace & Defense

Missile Defense Funding

$500M was allocated for Israeli a missile program and $50M for a joint program to combat assault tunnels in the 2019 National Defense Authorization Act passed in early June by the U.S. Senate. The allocations, which still require approval by the entire U.S. Congress, represent the first time military aid to Israel comes under the new 10-year aid agreement signed by the two countries in 2016. Under the terms of the package, Israel will receive $3.3B annually for financing military procurement and $500M for the Iron Dome, David’s Sling and Arrow 3 missile defense programs.

IMI Sale Approved

The Government Committee for the Sale of State Shares and the board of directors of Elbit Systems have approved Elbit’s purchase of government-owned IMI Industries for $522M, including landmark payments and pending approval by the Antitrust Authority. Privatization of IMI was pending for years: The Israeli government first sought to privatize IMI in 2005, but the plan wasn’t approved until 2013. A tender for IMI’s purchase was launched in 2015, with 12 companies participating, including US-based multinational electronics manufacturer Flex LTD., New York City-based Renco Group LLC, and Israeli private equity firm FIMI Opportunity Funds. By January 2016, Elbit was the sole contender left, but the negotiations, centering on price and other conditions, dragged on until this year.

Aid Study 

An interministerial team is due to present a study on the effect of conditions attached to Israel’s new military aid agreement with the United States on Israeli defense industries by January. The study, ordered by Economics Minister Eli Cohen, comes in the wake of apprehensions in the Defense Ministry and defense contractors about the long-term effect of the agreement, which was signed with the Obama administration two years ago and went into effect this year. While the agreement increases annual military aid from $3.4B a year to $3.8B, over its 10-year span, it gradually eliminates Israel’s option of converting 25% of the annual sum to shekels, meaning that it can only be used for purchases from U.S. companies. The loss of billions of shekels that can be diverted to Israeli contractors, according to an earlier MOD survey, could cost Israeli defense industries, particularly smaller firms unable to set up U.S. subsidiaries, as many as 22,000 jobs over the course of a decade, according to a report in Globes.

U.S. Getting Trophy

The U.S. military is acquiring Trophy, the active defense system developed by Israel’s Rafael Advanced Defense Systems and Elta, a subsidiary of Israel Aerospace Industries, in a $193M deal announced by Rafael in late June. The deal was signed with Leonardo, a U.S. defense contractor, which will serve as the direct supplier of the system for battle tanks and armored personnel carriers, which will be manufactured both in Israel and the U.S.

Trophy is the world’s only active defense system for armored vehicles. Developed as a result of lessons learned in the Second Lebanon War, it was installed on over 1,000 Israel Defense Forces platforms, including Merkava Mark 3 and Mark 4 battle tanks and Namer APC.

Revolutionary Radar

Israel Aerospace Industries has introduced ELM 2138M radar with 360-degree surveillance capabilities that it says may revolutionize tactical air defense. The first contract with a European customer has already been signed for the radar system, which can be integrated into existing systems, has great mobility, and can provide real-time information on rocket and artillery launch and impact point information. ELM 2138N was unveiled at the Paris Eurosatory defense fair in early June.

Among the other state-of-the-art Israeli developments on show at Eurosatory were Steadicopter’s Black Eagle 50 unmanned rotary aerial vehicle, which can hover for three hours and stay aloft for four and a variety of manned and unmanned border security systems.

Romania Buys Iron Dome

Romania became the first foreign country to purchase Israel’s Iron Dome short-range anti-missile defense system. The purchase is part of a contract between Rafael Advanced Defense Systems, Iron Dome’s developer, and Romanero, a Romanian company, for the transfer of technology for several systems, also including the naval version of Iron Dome, Spike tactical missiles and Samson remote weapons systems. Value of the entire deal runs into hundreds of millions of dollars.

India Spike Deal Reported

India is about to purchase 4,500 Spike anti-tank missiles made by Rafael Advanced Defense Systems, according to a report in the Hindustan Times. The deal, which still has not been approved by Prime Minister Narendra Modi’s government, originally involved 8,000 missiles, 3,000 of which were to be made in India. According to the Hindustan Times, the $500M deal was not finalized then because Israel did not agree to the manufacture of so many of the missiles in India.

Germany Approves UAV Deal

The Israel Air Force base at Tel Nof, near Rehovot in the center of the country is expected to serve as the training site for German crews operating seven UAVs to be leased from Israel Aerospace Industries.

Germany’s Bundestag approved the deal for leasing the Heron UAVs, for eventual use in German army attack operations in Mali and Afghanistan, in early June. Under the terms of the deal, the UAVs will be leased to Airbus Defense and Space. It includes a substantial payment to the Israel government for the use of airports and control facilities, plus support and maintenance.

Suicide Drone Unveiled

Israel Aerospace Industries said in mid-June that it has completed proof of concept for its new Rotem, an unmanned aerial device that uses a grenade to attack and destroy targets in combat situations. Rotem weighs less than 7 kg, is collapsible, has a quiet electric-powered engine and can be carried and operated by a single soldier in battlefield situations. Once it is airborne, Rotem transmits high-resolution visuals to a tablet device allowing the operator to monitor the situation and lock on to a specific target from a safe distance of up to six miles.

Smart Shooter

An Israeli company has unveiled a small arms fire control system that can turn even the most basic small arms into 21st-century smart weapons. Smart Shooter Ltd., of Kibbutz Yagur, not far from Haifa, introduced its SMART system to the international market at the recent Eurosatory defense show in Paris. Smart Shooter claims that fitted to almost any weapon, its basic kit assures a first-round hit by eliminating the human factor and movement of the target from the firing range. The system features see-through optics, a naturalistic sight picture; clear day and night vision capabilities; a lock and track capability; and easy to use controls. An advanced SMASH system adds a drone mode for threats from mini-UAV, and video storage for training and review of engagements.

Elbit in Austrian Pandur

ESL Advanced Information Technology, a subsidiary of Israel’s Elbit Systems, has supplied WS4 Panther weapons stations for Austria’s Pandur Evolution armored personnel carriers. Lead contractor, General Dynamics European Land Systems has begun delivery of 34 of the advanced APCs in a contract valued at 105M euros.

Drones Monitor Port Project

Drones manufactured by Airobotics, a developer of small automated industrial UAVs based in Petah Tikva near Tel Aviv, have been monitoring the construction of the new $1B Gulf Port in Haifa Bay for nearly a year. Working in conjunction with the Shapir-Ashtrom contracting firm that is building the new port, Airobotics drones, which do not require human operators, survey reclamation areas and monitor breakwater construction and stockpile measurements for the 810 acre port.

Sheffer New IAI CEO

Nimrod Sheffer, a former deputy commander of the Israel Air Force and head of the IDF General Staff’s Planning Division, was named Israel Aerospace Industries next CEO. Sheffer will replace Joseph Weiss, who has reached retirement age. Prior to his latest appointment, Sheffer, a reserves major-general, was IAI’s vice president of strategy and research. The nomination must be approved by the Finance and Defense ministries and the Government Companies Authority.

Air Force Conference

Representatives from more than 20 countries, including the commanders of national air forces or their representatives, attended a mid-May Israel Air Force conference marking the 70th anniversary of Israeli independence. Though political sensitivities prevented disclosure of a full list of attendees, the IAF said the guest list for the conference, held in Herzliya, included the U.S., U.K., France, India, Vietnam, Poland, Romania, Canada, Finland, Brazil, Holland, Cyprus, Czech Republic, Croatia, Italy, Greece, Belgium and Austria. IAF commander Maj.-Gen. Amikam Norkin took the opportunity offered by the conference to disclose hitherto-unpublished details of the May 10 rocket attack by Iranian forces on Israeli positions in the Golan Heights, to which the IAF responded with a massive bombing of Iranian operational and logistic facilities inside Syria. Norkin said that Iranian forces had fired more than the 20 rockets they claimed to have aimed at Israel. In truth, he said, 55 rockets, some of heavy caliber, were fired in the barrage, and that 100 Iranian-Syrian anti-aircraft missiles, but none hit their targets, were aimed at Israeli aircraft in the counter-attack.

Shaldag Delivery

Two Shaldag fast patrol boats were delivered to Argentina in late May, the last of four vessels ordered from Israel Shipyards in a $49M contract signed in 2016. The first two were delivered earlier this year. Shaldag MK II fast patrol boats, equipped with 20 and 25mm gun systems, will be used by the Prefectura Naval Argentina, Argentina’s Coast Guard, in the fight against drug trafficking on the Paraná and Uruguay rivers.

Thai F-5s Israeli Upgrade

Thailand has unveiled the prototype for its upgraded F-5 Super Tiger warplanes, modified with new software by Elbit Systems, the Israeli private defense contractor. The Royal Thai Air Force aircraft were upgraded under a $97M contract with Elbit and Israel’s Rafael Advanced Defense Systems as a subcontractor. The upgraded F-5ST is a fourth-generation jet fighter with advanced operational capabilities including powerful modern radar, a sophisticated EW suite, glass cockpit, high accuracy air-to-ground capabilities, advanced IRIS-T air-to-air missiles, and Elbit’s Helmet Mounted Display.

Australia Getting Spike

The Australian Ministry of Defense has chosen Ebit Systems‘ Spike LR2 anti-tank guided missile to arm the Australian Army’s new Rheinmetall Boxer CRV. The Israeli missile was chosen over German company MBDA‘s MMP (Missile Moyenne Portee) medium-range missile. Value of the deal is not yet finalized. Australia is the second foreign customer for Spike LR2, after Latvia, who ordered an undisclosed quantity of the missile earlier this year.

Precision for Unguided Rockets

Rafael Advanced Defense Systems has unveiled details of its EPIK (Electro-Optical Precision Integration Kit) technology development designed to provide unguided surface-to-surface rocket systems with autonomous stand-off precision guidance and increased range. EPIK leverages the electro-optical sensor and scene-matching/signal processing technologies developed for Rafael’s Spice family of air-to-surface munitions.

Elbit Revenues Rise

First-quarter revenues of Elbit Systems rose to $818.5M, compared to $749.2M in the parallel quarter of 2017, the defense contractor reported in late May. Gross profit for the quarter was $235.4M (28.8% of revenues, compared to $229M (29.5% of revenues) in 2017’s first quarter. Elbit said its orders backlog reached a record $8B.

IAI’s $12B Backlog

Government-owned Israel Aerospace Industries said its orders backlog reached a record of about $12B in the first quarter of 2018. Sales rose by 5.5% to $883M for the quarter, with operating income at $34M.

Bombardier Eyes Investments

Bombardier, the Canadian rail and aircraft giant, is seeking to increase its Israeli investments by 50%. The Canadian company recently sponsored a Tel Aviv conference, in cooperation with the Industrial Cooperation Authority, the Manufacturers Association, Export Association and other Israeli bodies, to seek out new partners for reciprocal purchasing. Operating in Israel for almost 20 years, Bombardier has supplied Israel Railways with rail cars and locomotives, many of which have been assembled at plants in Beersheba and Dimona.

IAI, Honeywell Team on Anti-Jamming

Israel Aerospace Industries and Honeywell, the New Jersey-based international conglomerate, have teamed up on development of a turnkey GPS anti-jamming navigation system for the aviation market. The outcome: A marriage between IAI’s GPS anti-jam system and Honeywell’s EGI Global Positioning System/Internal Navigation System designed to protect satellite-based navigation systems embedded into modern navigation, communications, intelligence and electronic systems.

New Rada Radar

Rada Electronic Industries introduced two new tactical radar systems at Eurosatory 2018, held in Paris in mid-June. One of Netanya-based Rada’s new products, the eCHR, is an enhanced version of its CHR currently installed in active protection and hostile fire detection systems for combat vehicles. The other, xrMHR, provides mid-range detection, classification and tracking for a range of aerial targets, including small drones and tactical UAVs, serving as fire-control radar for threat interception.

New Barak

Israel Aerospace Industries recently unveiled Barak MX, a naval and land-based missile defense system supporting a range of radar and launchers providing an optimized response to fighter aircraft, helicopters, cruise missiles, air-to-ground and ground-to-ground missile threats. The system supports short-range vertical -launched Barak MR Interceptors with a range of up to 35 km, medium-range Barak LRAD and longer-range Barak ER, depending on the type of threat and mission.

Naval Exercise

Israeli missile boats successfully completed a complex series of training exercises recently, involving simulated defensive and offensive operations in Israel’s territorial waters. A Saar 4.5 class missile boat successfully intercepted and downed an unmanned aircraft simulating a cruise missile with its Barak naval defense system. In the second part of the exercise, an enemy ship simulator was attacked and successfully destroyed by two naval cruise missiles launched from Israel Navy crafts.

Azani Named 

Hagay Azani was named CEO of Controp Precision Technologies, a developer of surveillance systems including thermal imaging cameras and electro-optical devices based in Hod Hasharon, northeast of Tel Aviv. Azani previously served as the company’s VP for marketing and sales.

New Spike Version

Rafael Advanced Defense Systems has released details of Firefly, a new variant of its Spike family of man-portable loitering systems specifically designed to deliver organic fire support for light ground forces engaged in urban environments. Firefly’s characteristics include a 15-minute loitering duration in wind speeds of up to 23 kph, with stand-up ranges of 1,500 meters in open terrain and 500 meters in an urban situation.

Rampage Unveiled

IMI Systems and Israel Aerospace Industries have unveiled Rampage, their jointly developed supersonic, long-range air-to-ground missile. Rampage boasts a warhead, rocket engine and advanced navigation system enabling precision striking of high-quality, well-protected targets. The new missile, which can be operated in all weather conditions, is designed for use against a variety of targets, including communication and command centers, air force bases, maintenance centers, infrastructures and valuable field targets protected by air defense systems.

Rotem Passes Test

Rotem, Israel Aerospace Industries‘ lightweight lethal assault unmanned aerial vehicle, can be operated by a single combatant, has vertical take-off and landing capability, and can be used on surveillance and assault missions. IAI recently demonstrated the system’s precision in a fast assault on a miniature target.

Navy Gets New Torpedo

A new heavy torpedo set to become operational on Israel Navy submarines successfully passed its final pre-deployment testing in mid-June. The digitalized torpedo system is designed for use against both underwater and land targets at ranges of dozens of kilometers. Israel currently has five submarines.

British APC with Iron Fist

BAE Systems, the British defense contractor, has unveiled a new infantry fighting vehicle fitted with the Iron Fist active defense system developed by Israel’s IMI. According to the Israel Defense website, the system was offered to the Czech Republic as a replacement for its aging BMP-2 armored vehicles. Other countries, including Brazil, have also expressed interest in the system.

New Wheeled APC

The Defense Ministry in mid-June unveiled the final version of the Eitan, the new wheeled armored fighting vehicle due to be operational in IDF units by 2020. Based on lessons learned during 2014’s Operation Protective Edge in the Gaza Strip, the Eitan can travel quickly to its destination on ordinary roads rather than by heavy tank transporter, can reach speeds of up to 90 kph, is more maneuverable than ordinary APCs, has advanced weapons and navigation systems and capability for a 60-degree view of the battlefield. Developers are Israel Aerospace Industries, Rafael Advanced Defense Systems and IMI Industries in cooperation with the Defense Ministry’s Merkava and Armored Fighting Vehicle Authority.

Communications Base

The Defense Ministry has chosen a consortium of two Israeli companies, Shikun & Binui and Africa Israel Investments, to build and operate the IDF’s new communications base in the Negev desert. The 25-year contract for construction and operation of the base is valued at $2B.

Electric IDF Vehicles

Small electric-powered vehicles for use by Special Forces were tested along the Gaza frontier, according to a report in the Walla! Website. The off-track vehicles, called Raider, were originally intended as a fuel-saving measure for use in agricultural fields; now they may be used to facilitate silent approach by military units.

Lavie Predecessor

On the 30th anniversary of the cancellation of the Lavie, the ambitious project to build an all-Israeli fighter aircraft that failed due to budgetary constraints, Yediot Aharonot has disclosed details of an even-larger and more ambitious project to build a futuristic warplane. The project, called the Arie, was launched in the 1970s and based on infrastructure developed for the Kfir, the Israeli adaptation of planes of the French-made Mirage fighters. The Arie was to incorporate several systems that were very advanced for the time, fly-by-wire digital control systems, helmet-mounted display, advanced avionics and radar capable of acquiring low-flying targets. The project was called off with the acquisition by Israel of U.S.-made F-15 and F-16 aircraft.

Controp’s Asian Sale

Controp, a developer of thermal imaging cameras and electro-optical infrared devices for security and defense, was awarded a $31M, 20-month contract with an unnamed Asian country. Based in Hod Hasharon northeast of Tel Aviv, Controp is a subsidiary of two Israeli defense firms, Aeronautics and Rafael Advanced Defense Systems.

Gilat’s Peruvian Contract

Gilat Satellite Communications, based in Petah Tikva just east of Tel Aviv, was awarded two regional telecommunications infrastructure projects in Peru. The contracts, valued at $153M, are with Peru’s Fitel investment fund. Gilat will build infrastructure in two regions, Amazonas and Ica, to serve the general population and connect schools, police stations and health centers.

Finland Buys IAI’s Gabriel

Finland will purchase Gabriel sea-to-sea missiles from Israel Aerospace Industries in a deal valued at about $190M, the Defense Ministry in Helsinki said in early July. The system, which includes launchers, missiles, simulators, testing equipment, spare parts and training, will be fitted to the Finnish Navy’s Hamina-class and Squadron 2020-class vessels and on “a vehicle platform.” Delivery is scheduled to begin in 2019 and be complete by 2025.

Gabriel was chosen over Kongsberg’s Naval Strike Missile, MBDA’s Exocet, Boeing’s Harpoon and Saab’s RBS15.

Israeli Wheels for U.S. Vets

The U.S. Department of Veterans Affairs approved the purchase of 2,000 sets of shock-absorbing wheelchair wheels from SoftWheel, a Tel Aviv-based start-up. 361 sets of the $2,500 wheels, which have a built-in shock-absorber, have already been delivered to U.S. contractor Newmotion, with the remainder due over the next three years.

IAI’s Taxibot at India Airports

Israel Aerospace Industries‘ TaxiBot, a semi-robotic device which takes airliners from the landing sleeve to the runway without using the aircraft’s engines, is headed for India. IAI will supply KSU of India with vehicles to be used at airports in New Delhi and Mumbai. In four years, 38 TaxiBots, said to save up to 85% of fuel costs from maneuvering airliners on the ground and reduce noise by 60%, will serve Indian airports.

Elbit UAVs Get OK

Hermes 900 StarLiner, Elbit Systems‘ new military UAV, complies with NATO regulations and can fly in civilian airspace alongside manned aircraft, the Israeli defense contractor announced in mid-July. The medium-altitude UAV, which is due to be delivered to the Swiss armed forces next year, recently concluded year-long flight trials over Israel’s Masada National Park, located near the Dead Sea.

 

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