First Quarter 2007: Boom for Primary Market, but Not for Investors

Sixty percent of the new offerings (some IPOs) lost ground in the quarter. Procognia sank 11% at debut

The year 2007 has been a banner one so far for the primary market. In the first quarter of 2007 alone, no less than 53 Israeli companies issued shares and bonds to the public, about half the number of companies that floated in the whole year 2006.  It was seven times greater than the number of offerings in the first quarter of 2005, two years before.

But it was hardly a banner quarter for investors: some 60% of the new offerings caused them losses.

Fifteen of the companies that tapped the market in the first quarter of 2007 were newcomers to the Tel Aviv Stock Exchange, up from 10 in the previous quarter and 11 in the parallel quarter. But it's less than a third of the number of companies that tapped investors for money.

Seven of the 15 newcomers were biotechnology-medicine companies and three were real estate sector firms.

The 53 companies raised a total of NIS 13.9 billion. Of the 53, twenty were real estate companies that raised a total of NIS 2.8 billion combined.

Eight of the companies were biomed, raising half a billion shekels together. The biggest of them was Bioline, which raised NIS 211 million, and Itamar Medical, which scored NIS 105 million.

The second quarter of the year is typically the strongest for new offerings. Most companies prefer to float based on annual results, not quarterly ones, to save costs.

Oil Refineries alone was responsible for almost half the enormous scope of money raised, NIS 13.9 billion: the state sold NIS 6.43 billion worth of shares.

The smallest offering was by Binyan, which raised the absolute minimum: NIS 6.8 million.

Loss leader

However, 60% of the first-quarter offerings of shares or bonds caused losses to investors. Thirteen of the 23 lost ground at their debut, and 14 of the 23 lost ground between their IPO date and March 29, which was the last trading day of the first quarter.

The worst offender was Procognia, which tumbled 11% on its first day of trade. Altogether it's lost 20% since its debut on the Tel Aviv Stock Exchange. Second is Allotex and third is Babylon, which lost 1% and 4.4% respectively on their first day on the floor. From their IPO to the quarter's end, they lost 16% and 15% respectively.

The losers list also includes Hanan Mor, Sialo Technology, Oil Refineries, Itamar Medical, Bioline, Applisonix, Prednizon, Prashkowsky, Inbar Lis, Nidar, Clal Finance and Superior Cables.