Israeli institutional investors affected by failure of Silicon Valley Bank

Several Israeli institutional investors might be among the many individuals and institutions affected by Silicon Valley Bank’s collapse last week.

While no Israeli institutional investor held SVB shares at the time of the collapse, Globes reported that “Israeli institutional investors have invested hundreds of millions of dollars in the bank’s investment funds, in venture capital funds and tech companies from Israel that managed funds in it.”

Israeli institutional investors that had put significant sums of money into SVB-managed investment funds include the Migdal Group and the Harel Group insurance companies.

The Migdal Group had invested $213 million into SVB Capital, the SVB venture capital fund, besides committing to invest another $41 million. Nevertheless, the Migdal Group downplayed the effects of the collapse on their investments in a statement.

“Migdal Insurance Company is not exposed to SVB but is invested in fund management activities managed by the bank,” the statement said. “The venture capital funds in which Migdal invests are a separate legal entity and are managed separately by a sister company of the bank. These funds are not a party to the proceedings with the bank. Migdal will continue to closely monitor the events and their consequences, as far as they are relevant.”

Another Israeli institutional investor, Harel Group, had invested $18 million in SVB Capital and $26 million in SVB’s venture debt fund, and had committed to investing an additional $107 million.

A statement from the Harel Group said that “Harel’s investments are not affected by the state of the bank,” as “Harel is not exposed to the bank but to debt funds managed by a subsidiary of the bank, which is a separate legal entity.”

The Harel Group’s statement did say that its investments would be affected by “the state of the companies to which the loans were given,” but noted that “the funds are very dispersed and the loans are managed at a high professional level and are backed by sureties.”

The Globes report also noted that “Israeli institutional investors have investments in venture capital funds that were or are still SVB customers,” citing hundreds of millions of dollars Israeli institutional investors have invested in Magma Venture Partners and Zeev Ventures.

The collapse of Silicon Valley Bank, America’s sixteenth-largest bank, has affected individuals and financial institutions around the world. It amounted to the second-largest bank failure in U.S. history. 

Two days after SVB’s collapse on March 10, Signature Bank followed suit, marking the third-largest bank failure in U.S. history. Two days prior to the SVB fall, Silvergate Bank also failed. 

With many concerned that other major commercial banks might fail too, the extent of the consequences of these bank failures remains to be seen.