The inter-ministerial committee for promoting investment in public R&D companies today submitted its final report to Israel Securities Authority chairman Shmuel Hauser, 18 months after it was established. The committee makes a number of recommendations for financing high-tech companies through the Tel Aviv Stock Exchange (TASE), by encouraging IPOs by fairly large companies and the establishment of public venture capital funds that will invest and support companies and early stage ventures. The committee also recommends several non-TASE solutions.
The committee was established because of the low trading volumes on the TASE on one hand, and the difficulties faced by Israeli high-tech companies in raising capital on the other. The report states that its mandate was "to examine the reasons why high-tech companies did not hold IPOs on the TASE at a level commiserate of their share in the economy."
Israel's capital market is disconnected from the country's high-tech industry, and solutions are needed to bring them together. The committee's conclusions are unsurprising, as they are similar with its interim conclusions, published last June.
Like other committee with a similar mandate over the past decade, the present committee sought ways to facilitate start-ups' path to becoming public companies and raise capital on the TASE. Drawing lessons from past failures, the present committee recommends that companies seeking to go public should have a valuation of NIS 200 million, and that they should receive easier regulatory and tax terms for an IPO. It also recommends that the TASE set up a new index, "High Tech" for technology companies with market caps of more than NIS 400 million.
Another important recommendation deals with the research needed to give investors more information about companies and their area of business. The committee recommends that the government partly finance research for small high-tech companies. It also recommends solutions to encourage private and institutional investors to invest in these companies, and to provide incentives for public venture capital funds.
The committee adds one interesting innovation - at both the local and international levels: it recommends allowing companies to raise up to NIS 2 million through crowdfunding by small investors investing up to NIS 10,000 each.
Published by Globes [online], Israel business news - www.globes-online.com - on January 22, 2014
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