Analysis Israel’s Secret Japanese Investor

The Finance Ministry raised $140 million from a Japanese strategic institutional investor in a private bond placement this week. The amount isn’t particularly large, but the treasury’s decision to call the investor “strategic” is intriguing.

It’s customary to distinguish between financial investors, whose aim is to turn a quick profit and move on, and strategic investors, who bring added value. That can be knowledge, connections in the industry, the ability to develop the company’s business and introduce it to new markets. Hence, our curiosity to discover the identity the strategic investor who is investing in the State of Israel.

Is it an investor with special knowledge about how to manage a country as complicated as Israel? Someone who, if we let him manage the country for two or three years, will bring us to new heights? It sounds tempting. If that’s what it is, let’s bring him over here. Israel needs strategic investors who know how to manage such a complicated business.

Who knows, if they’re really strategic, then maybe they will bring their people along, buy large chunks of the country and bring about a revolution in education, infrastructure and bureaucracy. Alas, not so fast.

The accountant general of the Finance Ministry, Roni Hizkiyahu, champions a strategy of widening the Israeli government’s investor base in Asia in general and in Japan in particular.

The state issues an external debt bond generally once a year, at the beginning of the year. In between the bond placements, the state tries to accomplish additional goals as well, including diversifying its investors.

Last month Hizkiyahu visited Japan and held a round of meetings with investors in a bid to interest them in buying Israeli bonds.

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