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Amid coronavirus, Tel Aviv Stock Exchange attracts most IPOs since 2007

Of the 27 firms that listed shares on the exchange this year, 19 were technology firms; ‘The high-tech engine has arrived at the exchange,’ TASE CEO says

Shoshanna Solomon is The Times of Israel's Startups and Business reporter

A stock market ticker screen in the lobby of the Tel Aviv Stock Exchange, in the center of Tel Aviv, March 15, 2020. (Flash90)
A stock market ticker screen in the lobby of the Tel Aviv Stock Exchange, in the center of Tel Aviv, March 15, 2020. (Flash90)

The coronavirus pandemic has been a boon for the Tel Aviv Stock Exchange, which has seen the number of companies holding an initial public offering of shares surge to 27, the highest number since 2007. Nineteen of these firms were tech firms.

Three firms dual-listed their shares in the exchange, bringing the total number of new companies added this year to 30. Five additional firms entered via shell companies.

Dozens of other tech firms are expected to issue shares on the exchange in the coming months, the TASE said in a statement.

The difficulty of air travel due to the pandemic has forced entrepreneurs who may have otherwise listed shares abroad to raise funds at home instead.

TASE CEO Ittai Ben-Zeev at a press conference in Tel Aviv, December 22, 2020 (YouTube screenshot)

“We have often spoken about how the exchange must connect to the Israeli high tech. It is right for the companies, right for investors, for the economy and all who live here. I am very happy that this year it has finally happened,” said TASE CEO Ittai Ben-Zeev at an online press conference. “The high-tech engine has arrived at the exchange and is growing in the bourse.”

Six tech firms were added to the TA-35 blue chip index this year.

The companies that listed shares on the TASE this year raised a total of NIS 4.6 billion, as the equity market saw a 43% surge of average daily trading volumes to NIS 1.9 billion compared to 2019. The trading volume was 36% higher than the average of the previous three years, 2017-2019, the TASE said in a statement. The data provided is as of December 17, 2020.

There are currently 454 companies listed on TASE with an aggregate market cap of NIS 819 billion, compared with 442 companies with shares listed on the exchange in 2019. Seventeen companies de-listed from the exchange this year, the data showed.

There we no tech IPOS on the TASE at all in 2019 or 2018, according to data compiled by IVC Research Center and Meitar Law Offices.

Traditionally, Israeli tech firms have like Check Point Software Technologies Ltd. and Wix.com and, most recently, JFrog and Lemonade have chosen to list their shares on foreign markets, like the Nasdaq, the New York Stock Exchange. The TASE has also seen some competition from Australia and Canada, though the coronavirus pandemic has curbed the number of foreign listings as it is more difficult to put together a line-up of investors from afar.

The TASE had been suffering for years from a drought of new share issues and falling volumes — a trend which now seems to have reversed.

The TASE on Tuesday also said that a venture capital fund, Group 11, and a startup, Veev, will be the first to join the TASE Up platform.

Launched a few months ago, TASE UP is an electronic platform that aims to give private high-tech firms, VC funds, funds specializing in real estate properties overseas, and credit funds access to investments from institutional and accredited investors. Unlike listing on the TASE main market, companies that are listed on the TASE UP platform remain private and are not subject to any reporting or prospectus publishing requirements under the Israeli Securities Law.

Group 11 is a Silicon Valley-based VC fund set up in 2011 that has invested over $200 million in tech firms. Seventy percent of its portfolio is Israel related, TASE said in a separate statement. Veev, with offices in San Francisco and Tel Aviv, has 280 employees and has raised $90 million from investors. The startup vertically integrates tech, design, modular fabrication and building to make better homes at cost and faster.

Trading in 2020 on the Tel Aviv Exchange was very volatile: In March, at the height of the crisis in the capital markets, the average daily trading volume reached NIS 2.9 billion, while in May through December the average daily trading volume was NIS 1.7 billion.

Capital raised on the equities market amounted to NIS 16.3 billion in 2020, compared to NIS 13.3 in 2019. Overall, more than 225 offerings and private placements were recorded this year, compared to 158 in 2019.

Corporations raised a total of NIS 66.8 billion in bonds on the TASE this year. There are 703 series of corporate bonds are currently listed on TASE, with an aggregate market cap of NIS 390 billion and an average daily trading volume of NIS 1.1 billion. “These figures position TASE among the most advanced and sophisticated bonds markets,” the statement said.

Interest from the UAE

Last week, the TASE announced the signing of what it called a “historic collaboration agreement” with the Abu Dhabi Securities Exchange (ADX), which will allow companies in the United Arab Emirates and in Israel to cross list securities, do mutual trading, tap into a new pool of investors, and collaborate in the development and commercialization of innovative financial technologies, the statement said.

There is a high interest from UAE institutional investors in exposure to the Israeli economy and its tech sector, Ben-Zeev the TASE CEO, said. Investing via the TASE will provide these investors the most “accessible, cheap and simple” path to these opportunities, he said.

The TA Tech Elite index, comprising tech and biomedical firms, rose 43% this year, in dollar terms, as of December 17, compared with a 46% gain of the Nasdaq 100 index. The TA-90 index, which tracks the shares with the highest capitalization not included in the TA-35 index, advanced 22%, whereas the blue-chip TA-35 index declined 7% this year.

The exchange launched five new indices this year, notably two new green indices; the TA-125 Fossil Free index and the Cleantech index. The three other indices were in construction, investment properties abroad, and investment properties in Israel.

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