It's open season on IPOs again
The Israeli market for initial public offerings dried up in mid-2007, and since then only two relatively small Israeli companies have debuted shares locally. That dry spell followed a flood of IPOs on the Tel Aviv Stock Exchange, which peaked at 60 new offerings in the first half of 2007.
Although the stock issues market started to recover in 2009, the only offerings were for shares in publicly traded companies that wanted more cash. Indeed, the business sector raised NIS 37 billion. While this is far below the NIS 88 billion raised in 2007, it is a significant improvement over the NIS 22 billion invested in the bourse in 2008.
In recent months trade on the TASE has picked up speed, approaching levels reached on the eve of the global economic crisis at the end of 2008, and now the market is preparing for a new wave of IPOs.
Many companies are already drafting prospectuses, and market sources estimate that between two and five medium-to-large companies will try to float shares at values of over NIS 300 million.
Kanit Management, Investment and Finance, which is controlled by David Azrieli, is one such company.
"The underwriters have not yet been chosen for Azrieli's planned issue," said a source in the underwriting industry Tuesday, who noted that in the meantime all the local underwriting firms have sent representatives to visit the property magnate.
Azrieli apparently intends to offer Kanit to the public within three or four months at a market capitalization of $2 billion, based on the latest financial statement.
Just how much capital Azrieli will want to raise has not yet been disclosed, and will depend on whether he wants Kanit to be included in the TASE's large cap TA-25 index. If so, he will have to sell at least 25% of the company to the public. Israel's four big underwriters - Clal, Poalim IBI, Leumi Partners and Leader Capital Markets - are likely to be handling the IPO.
Another company waiting in the wings to go public is Ampa Real Estate, the real estate arm of the Ampa Group, which is owned by the Fogel family and the Nakash brothers. The company initiates, develops and manages real estate projects in high-demand areas in the greater Tel Aviv area.
Among Ampa Real Estate's better known projects are Beit Ampa in Herzliya, Ampa Harel, Ampa Bisi Center TLV, the Elco Tower and Big in Beit Shemesh. About two months ago the company was negotiating with British Israel, a real estate company owned by Leo Noe and Poju Zabludowicz, who were interested in a controlling interest in Ampa Real Estate.
The figure mentioned as the company's value during those negotiations was NIS 1.5 billion, but no deal was signed and there is no certainty that this value will be used for an IPO. The Ampa Group is involved mainly in industry, trade, finance, real estate and high-tech. The Nakash family owns the Orchid Hotel in Eilat and the controlling stake in Arkia Airlines.
Another company that has been working on a pre-IPO prospectus for the past few months is Visa CAL, the credit card company controlled by Israel Discount Bank. The company value in that IPO could be as much as NIS 3 billion.
Five other companies, each valued at over NIS 300 million, have submitted prospectuses for initial public offerings, including two companies in the life sciences sector.
Those prospectuses are based on third quarter 2009 financial reports. By the end of January more companies are expected to file prospectuses, and market sources anticipate a much larger batch of prospectuses between now and mid-April, when companies will be using figures from their annual financial statements.
Most of the companies currently planning IPOs are subsidiaries of publicly traded companies, such as Dori Construction, Kardan Real Estate and Meshulam Levinstein Contracting and Engineering, which have already announced their plans. Levinstein, which is controlled by Shaul Lotan, has said the company is considering reorganizing its real estate assets and offering them to the public.
Another real estate company, B. Yair, is planning a bond issue, as are Tempo Beer Industries and three government companies - the Israel Postal Company, Netivei Gas and the Haifa Port.