Despite coronavirus, 2020 was a record year for Israeli tech exits

Israeli IPOs and acquisition deals of technology firms soared by 55% to a whopping $15.4 billion in 2020, as the average deal size more than tripled.

DECEMBER 22, 2020 13:40

Updated: DECEMBER 22, 2020 15:40

NYSE. (photo credit: Wikimedia Commons) — NYSE.

(photo credit: Wikimedia Commons)

What global crisis? Israeli IPOs and acquisition deals of technology firms soared to a whopping $15.4 billion in 2020, according to a report by PwC Israel Tuesday. That’s 55% higher than the previous record, 2019’s $9.9b.

The number of deals declined by 25% to 60 this year, from 80 last year, but the average deal size more than tripled to $257 million, the report said.

No less than 19 IPOs took place this year, up from 13 in 2019, with the share of IPOs in the total value of deals surging to $9.3b. The average value per IPO shot up from $169m. last year to $489m. in 2020, mainly led by Lemonade, JFrog and Nanox in the US, and Ecoppia and Aquarius Engines in Israel.

Meanwhile, there were six acquisition deals worth more than $500m. in 2020, compared to four last year.

The computing and software sector continued to lead the exits, with total value of deals reaching $7.4b. Other sectors showing significant growth were the internet sector and the life sciences sector.

“The biggest story this year is without a doubt the comeback of tech companies in the IPO market,” said Yaron Weizenbluth, partner and head of Hi-Tech Cluster at PwC Israel. “The end of 2020 would probably have been different without the surge in the number and value of IPOs by Israeli tech companies in the US and Israel.

“The resurgence of tech companies in the equity market has several reasons,” Weizenbluth said.

“Low interest rates, a larger monetary base, more government incentives and other capital directed to tech companies, and even a psychological shift in the Israeli capital market that make investors gravitate more towards tech are all plausible factors that may have generated this friendly environment for IPOs and value creation. Clearly, Israeli entrepreneurs did not miss out on that opportunity. The great results that stemmed from all the above probably accelerated processes that in normal times would have taken a far longer period to mature.

“Israel continues to grow as a fertile breeding ground for vast research and development, supported by a vibrant entrepreneurial culture,” Weizenbluth said.

“The confluence of the ever-growing need for technological solutions; robust markets that are willing to handsomely price tech companies; eager entrepreneurs looking to build independent, high-value companies all represent an excellent mix for this positive trend going forward. We believe that the revival of the Tel Aviv Stock Exchange, the expected significant IPOs by Israeli companies in the US during 2021, coupled with increased use of SPACs (Special Purpose Acquisition Companies), will continue to drive great performance in the coming year as well. Most of all, this may be a reflection of a new and important developmental phase for the local ecosystem, opening up of alternative financing and liquidity to allow companies to stay independent for the longer run.”