Anyone who’s stepped off the train without their umbrella or left a book in a hotel knows how easy it is to leave something behind. So does Phillip Schaefer. He recently organized a trip to Israel and he’s hoping the participants leave something behind — something like several billion dollars.
Schaefer, a Belvedere resident, is the president of the World Pension Forum, and his well-attended recent trip to the Jewish state was more than just a sightseeing tour. Nearly 50 participants representing pension or venture capital funds worth, in total, not billions but more than $1 trillion were given the full 10-cent tour of Israel from top to bottom.
Schaefer and trip co-organizer Yitz Applbaum of Oakland say vast sums of money may be flowing toward Israel in short order following the June 18-22 junket. Several of the fund managers already have entered into serious negotiations with potential Israeli partners, and Applbaum contends that $500 million to $1 billion may be invested in the Jewish state in short order, potentially to be followed by billions more.
“Definitely a couple of billion will be invested in Israel because of this mission. And it’s not just going to be venture capital firms but lots of other, alternative forms of investment vehicles like building private equity, hedge funds, real estate funds and water funds — people are very interested in what’s going on in Israel with water,” says Applbaum, the founding general partner of Opus Capital, a venture capital fund with heavy investments in Israel.
Applbaum was particularly bullish on future investments in Israel from Mass PRIM, the state of Massachusetts’ pension fund, New York State Comptroller Alan Hevesi and California’s own CalPERS and CalSTRS pension funds. Combined, those three funds are valued at nearly $300 billion, and all have previously invested in Israel.
Of course, since Schaefer and Applbaum led the delegation, things have changed a bit in Israel — there’s that war, for one thing.
Applbaum is unfazed, however. He feels that once large-scale hostilities are over, Israel’s investment opportunities will kick right back into motion.
“If you look at the last 15 years of investment cycles in Israel, they’ve been predominantly unaffected by different geopolitical issues. During the Iraqi war production was up at the Intel plant,” he said.
Applbaum also is undeterred by the fact that anti-Israel divestment activists are targeting funds like CalPERS and CalSTRS. Fund managers are “not going to have their actions swayed by fundamentalism,” he noted. What’s more, investment in Israel can be a boon for the entire region. And if you don’t agree with Applbaum, he’s got a king who could tell you the same — Jordan’s Abdullah.
The king met with the delegation in Aqaba, having left a breakfast meeting with Israeli Cabinet member Shimon Peres expressly to do so. And when the delegation was late, the king sat and cooled his heels for 45 minutes.
“When we got to Aqaba I didn’t know what was going on. There were 15 people [outside the plane on the tarmac] and I was told they’re the [Jordanian] cabinet,” recalls Schaefer with a chuckle.
Applbaum and Ron Schmitz, the chief investment officer of Oregon’s Public Employees Retirement Fund enjoyed a private audience with the king (“a remarkable thrill,” Applbaum concedes) and Abdullah encouraged region-wide investment and even bandied about the idea of cross-border investment in both Jordan and Israel.
Waiting on billions in investments is often “like having a baby,” notes Schaefer. “It takes a little time. But this time, we’ll have the baby quickly. There’s so much excitement!”