Emefcy, which develops technological solutions for sewage treatment, has merged into Savcor, an Australian stock exchange shell, accompanied by a financing round, and will become a public company with a market cap of 35 million Australian dollars ($25 million).
Emefcy CEO Eytan Levy told Israel NewTech “We are very excited and looking forward to developing value for our shareholders. Australia and Israel are building a significant technological cooperation, and Emefcy is one of the first companies in this journey.”
Adi Yefet and Oded Distel of Israel NewTech congratulate Levy and the team at Emefcy: “Eytan Levy is one of the experienced leaders in Israel’s cleantech industry, having founded first Aqwise, and now Emefcy. We at Israel NewTech have cooperated with Emefcy since its founding, and are happy to see them succeed. I believe this cooperation will open doors for additional Israeli companies to take steps in the Australian market,” said Distel.
Globes reported on the deal, and interviewed Savcor Chairman Peter Marks. Below are excerpts from the article and interview:
CEO Eytan Levy and CTO Ronen Shechter founded Emefcy in 2008. They are well known entrepreneurs in their field, having previously founded AqWise. Over the years, they raised $15 million from prominent investors, most of whom are still company shareholders after the current merger: Israel Cleantech Ventures, Plan B Ventures, and GE Ventures, the corporate venture capital arm of General Electric.
Several months ago, a deal with Savcor was agreed, in which the Australian company acquired 100% of Emefcy in a share swap that included a 13.8 million Australian dollar financing round last week. After the deal was completed, the company changed its name to Emefcy. In the initial stage, the original Emefcy shareholders hold 65 million shares in the merged company with a value of 13 million Australian dollars, less than the amount invested in the company to date. At the same time, on the basis of meeting commercial milestones, the value of their holding is likely to grow when they receive more shares. According to Savcor chairman Peter Marks, “The Emefcy shareholders are receiving a position in a company in whose commercial potential they have confidence, and are happy to wait for the arrival of the commercial milestone.”
In a “Globes” interview, Marks talks about the merger of the two companies: “Savcor was a stock exchange shell, and we looked for interested technology companies with which we could merge,” he says. “We weren’t looking for digital or social media companies; we wanted innovative technologies on a global level. Through introduction and connections, we arrived at Emefcy, and began talking about an acquisition several months ago.”
Advice for the deal was provided by Sapir Capital Group managing partner Baruch Halpert, who represented the acquiring company in Israel.
“Globes”: What did you find in Emefcy?
Marks: “It has innovative and leading technology in sewage treatment, developed over seven years. It has high-profile investors and experienced entrepreneurs, Eytan Levy and Ronen Shechter, who have already done it at AqWise, and a group of committed and experienced people. This is a great opportunity, and what’s also important is that it’s not necessary to wait 3-4 years to make the technology commercial: most of the research and development has already been done, and they are current working on the next generations of the products. The financing round we did was designed to help initial sales efforts.
“The technology works, and there’s a strong pipeline of projects. The first project, which was in Israel, will begin in the first quarter of 2016, and we expect additional projects in the Caribbean Islands, the US, Latin America, Australia, and other places, and in the long term, also in China and India. Emefcy’s technology is very suitable for regions with little water. It is both innovative and economically worthwhile.”
So why did Emefcy agree to be sold just before its commercial breakthrough?
“First of all, no existing shareholder is selling. All of them are staying aboard, except for one that cannot invest in companies listed on the Australian stock exchange. They are sticking with us, because they believe in the company’s ability.”
According to Marks, he knows of other Israeli companies that want to be listed on the Australian stock exchange. “The Australian stock exchange is like a public venture capital fund, without the existing restrictions applying to an investment by a venture capital fund,” he says. “There are many public companies in the early part of their lifespan. In the US, they would raise money from venture capital funds, while in Australia, they turn to the stock exchange and start raising capital relatively early for the purpose of future expansion. For example, the Australian market is very supportive of the offering and of Emefcy as a company with innovative technology.”
Do you plan to have Emefcy listed for trading on Wall Street, too?
“Being listed in Australia is a springboard. In order to get to Nasdaq, you need a much bigger market cap, say $200 million. We certainly hope to achieve that.”