The reasons for the very likely wave of IPOs on the Tel Aviv stock exchange are manifold.
One trigger is certainly the pandemic. It has made it clear to many founders that the time has come, especially in the tec-sector, to launch an IPO.
The pandemic has given a boost to digitalization. Exactly the sector, Israel eco-systems are heavy-weights. Fresh capital is now needed to meet the needs of the market. Growth needs capital and vice versa.
It is an open secret that heavyweights of Israeli companies from the technology sector, such as IronSource or Nayax, plan their IPO for the 1st quarter 2021 and 2nd quarter 2021 respectively.
IronSource is currently estimated at an enterprise value of USD 8 billion and Nayax at USD 1 billion.
Mature Market
Currently, Israel saw 14 new “unicorns” in 2020, i.e. privately owned companies with a company valuation greater than USD 1 billion. The number of unicorns will multiply in 2021. Driven on the one hand by IPOs on the other hand by classic VC or CVC.
The existing market capitalization also speaks for this. The start-up sector alone has more than quadrupled its market capitalization in the last six years. In 2014, all startups were capitalized with around 2 billion USD and today, as reported on Glocalist, the market capitalization is around 10 billion USD.
Other drivers: privatization and established companies
And this does not even include the planned privatization of established companies like IAI. The IAI is to be privatized according to a government resolution. However, this is subject to new elections, possibly in March 2021.
The privatization of IAI is likely to be realized on TASE. Other IPOs, such as from the foodtech sector or established medium-sized companies in the chemical and petroleum industries, are also on the map. Many medium-sized companies in Israel also need fresh capital for their innovations and market expansion.
So it will obviously be a very high-turnover, eventful year for the Tel Aviv Stock Exchange, which has been preparing itself extensively for this since 2019.
It is such a good time to make appropriate preparations to be able to participate successfully in the big IPO of the Israeli start-up economy. Globally, the players are already ready, recently also – due to the Abraham contracts – investors from the Gulf States.
If European VCs, investors and CVCs want to get involved, they must use the latest technologies to pursue disruptive or innovative strategies. Some have reasonable doubts wether the european capital market can match this challenge. Be it as it may, for sure is, Israel is preparing for a boom year in 2021; at least for IPOs.