Israeli Institutional Investors Slow Private Capital Investments Amid Market Shifts

Israeli institutional investors significantly reduced their private capital investments in the first quarter of the year, according to a report by Value Advanced Investments. While 133 private investment funds raised $91 billion from these entities, a substantial amount, it represents a slowdown compared to the $697 billion raised in all of 2025. This deceleration is attributed to a high inventory of unrealized assets, limiting investors' capacity for new commitments.

The total value of private investments, including direct real estate holdings, by these institutions reached $101 billion, approximately 10% of the $3.2 trillion in public savings they manage. Migdal Insurance Company leads in private investment with $23 billion, focusing heavily on private real estate. Phoenix Insurance follows with a $19 billion private portfolio, emphasizing private equity, and Clal Insurance ranks third with $18.2 billion.

Despite the overall slowdown in fundraising, institutional investors have shifted their focus to new areas. Logistics, data centers, and energy are now prominent investment targets, offering improved returns. The secondary market, where institutions trade private assets among themselves, is also booming, particularly in infrastructure, credit, and energy sectors. Direct lending to small and medium-sized businesses through platforms is another developing area.

This shift is partly driven by rising global interest rates, which have made leverage more expensive. The report also notes that Israeli institutions are increasingly investing directly in infrastructure and energy, often partnering with specialized companies. The total assets managed by institutional investors in Israel surpassed $1 trillion in the first quarter, doubling since 2019, largely due to strong stock market performance.