Succession before price: family-owned plants in southern Israel

In March 2021, Kibbutz Nir Oz and Kibbutz Nirim agreed to sell their 37.8% stake in Nirlat Paints to Inrom Construction Industries, for Inrom shares then valued at NIS 266 million, making Nirlat a wholly owned Inrom subsidiary.¹ On 7 October 2023, Nirlat's plant at Kibbutz Nir Oz was badly damaged in the attack and went out of use. In March 2026, Inrom reported that it will build a renewed plant at Nir Oz, an investment of NIS 400 million expected to take about three years.²

The owner changed, and the plant is being rebuilt where it stood. A family business in the south faces the same question at a transfer: not only who buys it, but whether the next owner keeps it running where it was built.

Not every plant in the south has a large industrial group behind it. Fronterra Investments made its first investment in the Otef in 2022. After 7 October, it stayed and rebuilt the businesses there. Most of the businesses it talks to in the Negev and the Gaza envelope are family businesses facing a generational transfer, and that shapes how it works.

Fronterra Investments is a private equity fund taking control positions in profitable industrial and agri-industrial businesses in Israel's southern periphery. Its preferred deal is a profitable business whose owner has no one to hand it to.

What does the owner of a family plant ask first?

For the owner of a profitable family plant, the first concern is usually not the price. It is whether the business will outlast its founder.

Daniel Zelkind, Fronterra's Founding Partner, describes the deal Fronterra prefers:

"The preferred situation is a good business with no succession."

The plant works. The open question is who carries it next, and the answer an owner looks for is a plan, not only a price: reporting, a management layer and a succession plan that let the business continue after its founder.

Why is the work operational?

Traditional private equity relies on financial structuring, multiple expansion and market timing. In a mid-market industrial company those levers are small. The debt markets are not deep at this size, and there is no multiple to expand until the operation improves. What is left is the operation itself.

That is where Fronterra works. Its partners join the weekly operations review of the businesses it backs: production planning, scheduling, scrap, throughput and maintenance, the numbers that move EBITDA in a plant, read every week rather than every quarter. More on our investment approach.

How fast does Fronterra make changes?

Slowly. Working inside a family business means working alongside the people who built it. Zelkind's lesson from investing in the Otef since 2022, first shared in our first update:

"The business lesson is 'no sudden movements': changes are to be made slowly, and if possible, avoid making big changes in the first year."

What grants can a factory in the Negev or the Gaza envelope receive?

Under the Encouragement of Capital Investment Law, an eligible factory in Development Area A can receive a grant of up to 20% of its approved investment programme. Factories in the Negev, Sderot and the Gaza envelope are entitled to an additional 10%, paid once the programme is completed. Eligibility has conditions; one route requires at least 25% of the factory's revenue to come from international sales.³

Capital investment in Israel's development areas sits inside national programmes with real cash value. Structuring a plant investment around what is actually available is a specific skill. It is one of the reasons a fund focused on this region can pay for improvements a generalist would not underwrite.

What does a family-owned plant need from its next owner?

A next owner who keeps it running and makes it outlast its founder. For a private equity fund in southern Israel, that is operational work: inside the plant, every week, without sudden moves.

Sources

1. "Kibbutzim Nir Oz and Nirim sell Nirlat stake for NIS 266m", Globes, 21 March 2021.
2. Inrom report on the renewed Nirlat plant at Nir Oz, Nadlan Center, 25 March 2026 (Hebrew).
3. Ministry of Economy and Industry, Grants Program by virtue of the Encouragement of Capital Investment Law, read 22 October 2026.