US attorney: Israeli life sciences IPOs to continue

Robert Grossman sees more Wall Street IPOs despite market weakness.

Robert Grossman, the co-chairman of the Israel practice at the US law firm Greenberg Traurig, is optimistic that the wave of IPOs by life sciences companies on Wall Street will continue, despite the market weakness in the past few weeks. "None of the companies that I know that are planning offerings have stopped or slowed down their plans," he told "Globes" on a visit to Israel.

The Nasdaq Biotechnology Index has fallen 18% from its high a month ago, and has a negative yield year to date, after rising 16% in 2013.

"Alongside the IPOs flooding the market, which are mainly characterized by companies with products after clinical trials, we're seeing two other kinds of companies going public on Nasdaq: reverse merges with stock market shells and listing for trading by private placement without an IPO," says Grossman.

"Both these approaches can lead to an upgrade to a more important market, even as far as Nasdaq, if they succeed in generating interest in the share. I meet companies that are headed in this direction, after they raised only negligible amounts from private investors."

These companies believe that, after listing in the US, it will be easier to achieve a permanent high value and bring the company with this value to the Tel Aviv Stock Exchange (TASE). "It will be a lot easier to list a company at a value $50 million or less," says Grossman.

"I met a company that raised $15 million, and could have raised $25 million from private parties such as venture capital funds. The underwriters told them that they could raise $75 million on Nasdaq, but they might prefer to stay private."

In other words, companies are again beginning to see added value in venture capital funds, while the firms are finally again beginning to raise follow-on funds, he says.

Published by Globes [online], Israel business news - www.globes-online.com - on April 17, 2014

© Copyright of Globes Publisher Itonut (1983) Ltd. 2014

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