The Israeli drip-irrigation company Rivulus is being put up for sale by the FIMI private equity fund and could fetch a price as high as $500 million.
FIMI has retained Goldman Sachs to find a buyer for the company, the world’s second-largest maker of drip-irrigation equipment after Israel’s Netafim. The U.S. investment bank also managed the 2017 sale of an 80% stake in Netafim to Mexico's Mexichem for $1.5 billion.
Goldman sold Netafim for 14.8 times the company’s net asset value. If it achieved the same valuation for Rivulus, the company could be sold for $550 million, but sources said it was unlikely to achieve that, if for no other reason than Rivulus isn’t the world’s market leader like Netafim.
In addition, sources said sales growth at Rivulus was likely to be a modest 3% this year, with sales reaching about $370 million. Earnings before interest, tax, depreciation and amortization are expected to grow by $5 million and reach $40 million this year. In addition, Rivulus faces high raw-material costs and the impact of a strong shekel on its price competitiveness in export markets.
As a result, Rivulus could fetch a price of $450 million to $500 million, sources said.