Incentive Equity Management Firms Raise Millions With Tech Blast
A quick glance at the results of IBI Capital which are published as part of the financial report of the investment house is enough to understand the magnitude of the windfall of recent years. Revenue from the business, which was acquired by IBI from investment group Tamir Fishman in 2017 for just NIS 38 million (around $ 11.5 million), quintupled between 2017 and 2020, from 11.5 NIS in 2017 to 56 million NIS ($ 17 million) last year. The annual projections for 2021, which got off to a record start, amount to NIS 80 million ($ 24.4 million). This activity is also among the most profitable for investment houses, IBI generating a profit of 40% on its turnover.
The incentive stock management market in Israel is currently split between three players, with ESOP from investment firm Excellence and Benefits from investment firm Altshuler Shaham, which joins IBI. IBI and ESOP are thought to control around 40% of the market each, with Benefits holding a smaller share. IBI is particularly dominant among Israeli companies listed on Wall Street, while ESOP has a strong presence in the R&D centers of multinationals based in Israel. Benefits is lagging behind and Calcalist has learned that the company is also undergoing a managerial reshuffle, with deputy managing directors Dana Granot and Roy Fisher, vice president of operations and corporate services, both of whom recently left the company.
The business model of these companies is based on receiving compensation from technology companies calculated based on the number of employees receiving stock incentives and the commission paid by employees to make sales from their accounts. The accelerated growth of large, mature companies, whether public or not, which are recruiting more and more employees, along with the growing custom of granting options to almost all employees, has dramatically increased the size of mandates.
“Over the past three years, we have completed over 600 M&A and side transactions and the amount that has been passed on to employees is approximately $ 30 billion,” Dori said. IBI’s operations have grown considerably as a result, with the company currently employing 15 engineers after having only had two when it took over the company’s business in 2017. IBI employs a total of 120 people and has around 1,600 customers who employ more than 100,000 people.