Several factors have come together that make the current environment better than ever for public stock offerings.
By ZEV STUBARAMCO IS heading for an IPO but the September incident has repercussions.(photo credit: REUTERS)
The year 2021 is shaping up to be a huge year for Israeli Initial Public Offerings (IPOs). Several factors have come together that make the current environment better than ever for public stock offerings, said Ayal Shenhav, head of the Hi-Tech & Investment Funds Department at the Gross law firm.Gross, formerly known as GKH, is one of Israel’s leading law firms. The company officially rebranded itself on Thursday.“If you look at the past few years, you see relatively few Israeli IPOs, maybe about five per year,” Shenhav said.“This year, there are a few changes,” he said. “Firstly, you see more IPOs on the Tel Aviv Stock Exchange, thanks to efforts it made to connect more with the local tech community. Second, the growth of company valuations in the US makes going public very enticing. More companies around the world are planning IPOs, not just in Israel.”The list of large Israeli firms rumored in the Israeli press to be planning a 2021 IPO is long. Ad-tech provider IronSource is expected to go public on the Nasdaq in the first half of 2021 in what could be the largest-ever Israeli IPO, with a valuation of $7-8 billion. Cryptocurrency trading platform eToro is reportedly considering going public at a $5b. valuation, while project management software company Monday.com will be seeking $3.5-4b.OrCam, which makes devices to assist the visually impaired, will seek a valuation of $3b., and SimilarWeb, which provides web analytics services for businesses, will seek $2b. Taboola and Outbrain, two competing content-recommendation services whose merger plans were scuttled earlier this year, are each planning to raise $2-3b. as well. And there are many others.“Israel now has more than 25 ‘unicorn’ private companies worth more than a billion dollars, and they see that they can get very high valuations now,” Shenhav said. “Israel has matured as a technology center, and we now see many ‘second-time’ entrepreneurs who have had successful exits, and now seek to build something larger.”The rise of Special Purpose Acquisition Companies (SPACs) is also making the process of going public much smoother. Effectively a workaround for the heavy bureaucracy of filing an IPO, a SPAC is a shell company with no assets that can be created and floated on the market, and later gets filled in by merging with the corporation.“That makes the whole IPO process much faster and simpler, and gives the company greater clarity about the valuation it will get,” Shenhav noted.At this point, Shenhav concluded, Israeli firms are very familiar with the process of raising money, and an IPO offers a lot of benefits to tech firms and their investors. “It’s a win-win for everybody,” he stated.
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