Investment companies Clal Finance Underwriting and Professional Solutions Ltd. are set to launch a new $120 million fund for Israeli infrastructure projects, The Jerussalem Post has learned.

Caspi said he expected to close the first round of funding - of $20m. in Israeli investments - after the holidays and that he and Sultan have received commitments to invest from Clal Finances and some leading domestic institutional investors. Thereafter, they intend to bring the total amount to over $50m. through a second closing based on US institutions and investors, leading to the ultimate goal of building a $120m. fund next year to invest in water, power and transportation projects.

The accumulated financial experience of Yesodot partners would allow the fund's involvement in projects to speed up financial closure to between six and 10 months, from a current waiting time of 15 to 18 months, helping to realize infrastructure projects faster, Caspi said.

He added that a specialized infrastructure fund allowed for an investment model that would be simultaneously "tailor made" and implemented repeatedly "off the production belt."

Once investors receive full return on investments, 20% of additional profits will go to the general partners and the remaining 80% will go to the limited partners, plus 6% per year. Until then, the general partners will receive a 2% management commission. Any commissions paid to the general partners for projects' financial closures would go to offsetting management costs for the fund, not directly to Clal and PS coffers, Caspi stressed.

Part of the infrastructure industry's attraction has been that the investment is very low-risk given the government's backing to these projects. Over the next five years, the Israeli government has committed up to NIS 85 billion in public infrastructure projects in such fields as water desalination, electricity production, rail development between and inside cities, roads and energy production from waste.

"There is no doubt that Israel is an international superpower in water technologies, providing the basis for solid investments in the field," Caspi added. He stressed, however, that while the state's guarantees often turn out to be unnecessary in light of a project's actual performance, they are essential to bringing private capital into infrastructure projects.

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