“The paradox is that there is not enough Israeli money investing in our biggest industry,” said Israel Advanced Technology Industries (IATI) managing partner, Yoav Chelouche, who led a panel dedicated to high-tech offerings at the "Globes"-Ernst & Young 2013 Journey Conference in Tel Aviv today.
Chelouche said: “Most of the money comes from foreign investors, and that’s a shame. I hope that the Israel Securities Authority (ISA) and the Tel Aviv Stock Exchange’s (TASE) joint R&D committee will lead us to a situation where Israel has a good base, technologically and financially, for such companies.”
TASE Economic Department head, Hani Shitrit Bach, presented the main recommendations of the R&D committee, whose goal is to encourage high-tech public offerings, and whose conclusions will be submitted in-full soon. “There are 514 companies on the TASE, 135 of which are high-tech companies, but that is not enough, because we are ‘start-up nation,’” she said. “There are some companies that leave Israel, and others that are acquired by American companies, and we end up missing out on the younger generation, and the ability to develop a healthy high tech industry.”
“This time, the TASE is aiming high: The target companies for IPOs are those with sales of NIS 80 million, or, for biomed companies, those that are nearing the end of phase II clinical trials,” she said. The committee also addressed smaller companies, and recommended that they enter the market through high-tech funds traded on the TASE.
“In order to expose the Israeli companies to both local and foreign markets, we will introduce two indices,” said Shitrit Bach. “One is the ‘Elite Tech’ index, which will include companies valued at NIS 250 million immediately following IPO, and companies with market caps of NIS 400 million, or higher. The market is waiting for this index in order to create ETFs. The other will attempt to market Israeli high tech abroad - not only those that are traded on the TASE, but also those that are traded on global markets, like Check Point and Amdocs. "
“The committee set the bar a bit high”
One of the companies that is traded both in Tel Aviv and abroad is the biomed company, Kamada Ltd. (TASE: KMDA). Kamada has been traded on the TASE since 2005. In 2010, they were approved to market medications in the US, and they recently had their first public offering on the Nasdaq. Kamada CEO and founder, David Tsur, said that the IPO in Tel Aviv had been a corporate milestone “without which we would not have been able to reach where we are today.” When asked about the bar set by the committee, he said it’s “a little high.”
ISA Corporate Finance Department head Sraya Orgad, who led the meeting alongside Shitrit Bach, said that the high-tech funds that will be traded on the market will invest in both privately and publicly held companies. Orgad presented another model, “R&D Funds”: “The idea is to create a product whose goal is to enable funding for young entrepreneurs, where in order to grow, they will need to establish partnerships with big companies,” he said.
Strauss Group Ltd. (TASE:STRS) VP Finance, Shahar Florence, spoke about this issue. “Anyone who’s tried to leave whipped cream in the fridge for a week without it collapsing can understand how much R&D is necessary to make it happen,” said Florence, who added that Strauss could partner with young tech companies. “The name of the game is leveraging our abilities; exposure to the market and to resources,” he said. “We have partnerships with big companies, like Danone and Pepsi, and we can provide the high-tech companies access to them.”
Sagi Schlisser, founder of TabTale, a company that develops apps for children, said he thinks the committee’s recommendations could encourage investment in young companies by letting funds and angel investors know that they will be able to “see the money” in an IPO on the TASE.
Published by Globes [online], Israel business news - www.globes-online.com - on October 17, 2013
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