(Bloomberg) -- Migdal Insurance & Financial Holdings Ltd., one of Israel’s biggest money managers, plans to invest about $2 billion in financial technology over the next two years, broadening its search for higher yields at a time of globally low interest rates.
The Israeli insurer, which manages 308 billion shekels ($97 billion) worth of assets, has set up an investment arm to ferret out fintech companies and funds in Israel, North America and Europe, Guy Fischer, chief investment officer at the Migdal Insurance unit, said in an interview.
Migdal will invest a minimum of $10 million to $20 million in equity deals, and will also offer debt to startups, said Moti Shatner, one of the founders of the California-based online credit firm Bluevine, who also helps run the insurer’s new investment arm. The company recently invested $100 million in U.S. consumer loans via Israeli startup Pagaya, with an option to increase the sum by $150 million.
The size of the new unit contrasts with the relatively low level of participation by Israeli investment houses in the tech industry, held back by a lack of expertise and internal company policies that favor less risky assets. Israeli money managers have been increasingly spreading money into new areas given that their cash piles have outgrown the local market.
“We are changing our approach,” Fischer said, adding that he expects Migdal to increase its fintech investments to 5%-10% of its asset portfolio over the next five to 10 years. Fintech investments “will become conventional” by that time and therefore are not “something that we can ignore.”
Migdal is working to finalize partnerships with some of the world’s biggest financial groups to bolster its chances when competing for deals, Shatner said. He declined to specify the names of the firms.
The insurer is seeking investments in areas like insurance tech, digital payments and lending in lieu of bank credit.
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