Capital raised in Israel dropped 30% in 2012

In 2012, business sector raised NIS 2,784 million in shares, warrants and convertible bonds, as compared with NIS 3,988m. raised in 2011.

April 24, 2013 00:04
2 minute read.
Zvi Hauser with PM Netanyahu at cabinet meeting

Hauser Netanyahu 311. (photo credit: REUTERS)

In 2012, businesses raised 30 percent less in Israel’s capital markets and 20% less in its debt markets than in the previous year, the Israel Securities Authority (ISA) revealed in its annual report Tuesday.

“In 2012, the business sector in Israel raised NIS 2,784 million in shares, warrants and convertible bonds... as compared with NIS 3,988m. raised in 2011,” the report said.

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Bonds raised NIS 25,479m. in 2012 in comparison to NIS 31,979m. in 2011.

During that time, no new companies raised equity on the stock exchange, and 45 companies were eliminated from trading.

ISA Chairman Shmuel Hauser said the agency was advancing an ambitious plan to boost investment that focused on striking a balance between removing unnecessary regulation to aid market efficiency and introducing new regulation for unsupervised areas of the market.

“At a period like this, we should increase regulation to reduce danger, but also make it simpler to invest. Both are right,” he said at a Tel Aviv press conference Tuesday, adding that his primary goal was to develop Israel’s capital market as a motor of economic growth.

To those ends, the ISA launched a committee to examine ways to increase trade volume and liquidity in the stock market.

The main items on the Authority’s agenda included simplifying financial reporting requirements, regulating trading platforms and ratings agencies, and opening up systems of online voting for shareholders.

On the reporting side, the agency proposed extending the shelf-life on investment prospectuses from two to three years, reducing reporting requirements and adding exemptions for small firms. It promised to regulate web-based foreign exchange platforms.

Hot on the heels of a public outcry that forced Bank Leumi to retract its decision to forgive investor Nochi Dankner’s Ganden Holdings of NIS 150m. in debt, Hauser noted that the prevalence of corporate attempts to reschedule debt was troubling.

“We’ve already had eight negotiations on debt rescheduling open this year,” he said, which followed 28 such negotiations beginning in 2012 and 34 in 2013. The fact that NIS 4b.-5b. were written off each year in such agreements indicated that the financial crisis had not fully passed, he said.

The report said that about a third of the companies traded on the stock exchange had warnings or references on their going concern, indicating large risk exposures.

Hauser also spoke out against the suggestion of unifying Israel’s regulatory bodies under one roof, saying that the model had failed in other countries and would be dangerous for Israel.

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