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US$100 MILLION PEACE TECHNOLOGY FUND SET UP FOR WEST BANK & GAZA —Will Encourage Sound Partnerships between Palestinian and Israeli Investors— —MOU signed in Paris by Arafat, Peres and Wolfensohn—


L. Joseph
Phone: (202) 473-7700
Fax: (202) 974-4384
E-mail: ljoseph@ifc.org


WASHINGTON, D.C., Jan. 20—The International Finance Corporation (IFC)—the private sector arm of the World Bank Group—is joining forces with the Peres Center for Peace (Peres Center), Capital Investment Management Corporation (Capital Group), and Evergreen Canada Israel Investments Ltd. (Evergreen Group) to set up a first-of-its-kind Peace Technology Fund (PTF) to boost private sector activity in the West Bank and Gaza and to encourage greater understanding through the promotion of sound business relationships.

The Fund’s purpose is to form partnerships between Palestinian and Israeli investors and also bring in the international community to invest in a broad range of sectors.  The injection of much-needed capital into the Palestinian economy will facilitate technology and know-how transfer, job creation opportunities, and managerial and production skills enhancement.  Investors will be attracted by the above average returns, the productive Palestinian workforce, favorable trade agreements with the U.S. and European Union as well as access to regional and global markets.  The international community is already showing great interest in this ground-breaking partnership.


A Memorandum of Understanding was signed to this effect in Paris today by Mr. Yasser Arafat, President of the Palestinian Authority; Mr. Shimon Peres, President of the Peres Center; Mr. Hani Masri for the Capital Group; Mr. Jacob Burak for the Evergreen Group; and Mr. James D. Wolfensohn, President of the World Bank Group on behalf of IFC.


The PTF is structured on a representational basis, bringing together international Palestinian and Israeli private sector investors and managers.  The committed capital from the private sector will be US$100 million, with 30% from Palestinian/Arab investors, 30% from Israeli investors, 30% from international investors, and a minimum 10% commitment from IFC.


Investments by the Fund will normally be in minority positions of privately-held Palestinian companies.  It will seek representation on the board of directors of the portfolio company and certain key rights, including protection of minority shareholders.
Joint ventures will be promoted between Palestinian and Israeli enterprises, encouraging investors to establish business ties with existing entrepreneurs, and start up new companies.


Mr. Wolfensohn said, “We are very proud to be associated with this Fund, which is the first of its kind to promote investment opportunities involving the Palestinian and Israeli business communities.  The PTF will create business opportunities, reduce unemployment through job-creating investments, open new markets and increase foreign exchange earnings.  We view it as a very positive development on the road to peace and prosperity in the region.”


The PTF will invest primarily in small and medium-sized companies across a broad range of high tech/high value-added industrial sectors in the West Bank and Gaza, including companies locating at the Gaza Industrial Estate.  High tech sectors being considered are computer hardware, software and information technology training, publishing and consultancy; electronic and electric office equipment; and telecom equipment and software.  Other sectors include apparel and textiles; food production and processing; tourism and lodging; selected manufacturing (component manufacturing using machine tools and plastic molding); general manufacturing (including technology upgrading); and infrastructure (roads, bridges, port facilities, electricity, water supply, sewerage and solid waste disposal).


The Peres Center is a non-profit and non-partisan organization based in Israel.  The Capital Group represents the Palestinian fund manager based in the West Bank and Gaza, and the Evergreen Group represents the Israeli fund manager based in Israel.  IFC is the largest multilateral source of equity and loan financing for private sector projects in developing countries.