“We see ourselves as a 215-year old start-up”

When Israeli companies think about an offering on the US capital market, their first thought turns to Nasdaq, not the New York Stock Exchange (NYSE) or its subsidiary, the American Stock Exchange (AMEX). Of the four Israeli offerings on Wall Street this year, three were on Nasdaq - MediaMind Technologies Inc. (Nasdaq: MDMD) , D Medical Industries Ltd. (Nasdaq: DMED); TASE:DMDC) , and Sodastream International Ltd. (Nasdaq: SODA) - and only Vringo Inc. (AMEX: VRNG-U ) chose the AMEX.
The NYSE is well aware of this and intends to do something about it. "Historically, there is not enough awareness in Israel about the New York Stock Exchange," says NYSE Euronext COO Lawrence (Larry) Leibowitz. "Israeli companies traditionally see Nasdaq as the natural home for them. In the past, the standards for listing on the NYSE were high, but that changed when we acquired the AMEX, which opened an arena for growing companies."

Leibowitz is participating in the "Capital markets - can't live with them, can't live without them" session of the "Globes" Israel Business Conference 2010. He will take advantage of the visit to Israel to meet local companies, venture capital funds, and entrepreneurs.

"Our activity in the US and Europe help a great many growth companies reach the public markets. We’ve nicely succeeded with American and Chinese companies, and now more than 50% of technology offerings come to us. In Israel, we haven’t told our story well to funds and investors until now," admits Leibowitz.

What is this story?

"We’ve undergone huge changes in recent years, and expanded in the global arena," says Leibowitz. We see ourselves as a 215-year old start-up that reinvents itself to stay relevant."

NYSE Group Inc. made two merges in recent years: the first was with Euronext NV in 2007, to become NYSE Euronext, Inc. (NSYE: NYX); and the second was with the AMEX, which targets smaller companies, in 2008.

Besides relations with Israeli companies, funds, and entrepreneurs, the NYSE has an ongoing relationship with the Ministry of Finance. "The Israeli Ministry of Finance tries to help entrepreneurs turn their companies public instead of being acquired," says Leibowitz. "Often, Israeli companies are sold to large companies before they reach the public market. This may be a good result for the entrepreneur, but it does not enable the creation of a real Israeli industry."

"Globes": In your opinion, when is it preferable for a company to be sold rather than go public?

Leibowitz: "The answer is different for each company. I think that there are a lot of companies that want to go public, but at the start of the IPO process are shocked by the effort needed and conclude that it’s easier to find a large company that already knows the field and to whom it isn’t necessary to explain everything from the beginning. In this case, the process may be faster, but on the other hand they forego the chance of independence in the market.

"The public market has been tough and unfriendly in recent years, and the credit crunch made it difficult to obtain financing from funds. Under these circumstances, entrepreneurs might say to themselves, ‘If I can’t get financing from the funds and I don’t go public, then it’s worthwhile for me to sell.’ But the situation is now changing, and there is a place to go public."

What industries are best suited for an IPO?

"This year, we saw offerings in a great range of industries. Internet companies have returned to the public arena, there are telecom, advertising, and other companies, and there are also companies that were public and were taken private, and are now considering returning to the market.

"We’re in a fascinating situation: Silicon Valley is full of companies that will hold IPOs in the next two or three years. It should be remembered that while many investors are currently worried about the markets and the economic conditions, but on the other hand, interest rates are low. The more comfortable investors feel, the greater the responses to IPOs will be."

Do you currently advise companies to begin IPO procedures?

"Absolutely, but only for companies that have a real story. A decade ago, companies went public without a business model, and without a revenue forecast. Today, companies holding offerings have a real business model or component that the public can grasp. That’s the right recipe for a successful offering. Investors are cautious and are seeking real value for investment, whether among Internet, new technology, or traditional companies."

As for Israeli companies, Leibowitz believes that there’s a pipeline of 10-20 companies that could go public in the US in the near future. "The Israeli economy was not affected as the US or European economies. Looking forward, the market is looking for international companies, and Israel has always been a source of technology innovation."