Israeli companies shine in Big Apple

Two NYC conferences highlight investment opportunities.

By SUSAN LERNER
September 17, 2006 10:07
nasdaq israel 88 298

nasdaq israel 88 298. (photo credit: Courtesy NASDAQ)

 
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From the newest technology start-ups to giants like Bank Leumi and Teva Pharmaceuticals, local businesses strutted their stuff in New York last week, quashing any doubts that Israel was open for business after the summer's war. "Don't worry, don't be afraid to come to Israel," Prime Minister Ehud Olmert told attendees at the Israel InnovaTech Conference via teleconference, pledging to continue the policy of offering incentive packages to companies that invest in Israel. The moderator of the conference, Ambassador to the United Nations Dan Gillerman told the gathering it was "very apt and very symbolic of the spirit of Israel, of the optimism of Israel and of the excellence of Israel that so soon after what was a very difficult time and very bloody war, we are back here sending out a message which is loud and clear that Israel is open for business - has always been open for business." Sponsored by the Israel Export & International Cooperation Institute, the Government of Israel Economic Mission to North America and the NYSE Group, among others, InnovaTech attracted more than 200 representatives of start-up companies, venture capitalists and other professionals. "I think Israel is an amazing, amazing opportunity. I think it has always had very high quality companies," Catherine R. Kinney, president and co-chief operating officer of the NYSE Group, told The Jerusalem Post. "The economy's very strong, the policies the government has put into place seem to be working very well, the stock exchange has grown rapidly - so I think right now is a really important, interesting and pivotal time." Kinney, who provided some of the conference's opening remarks, sees a great opportunity for foreign private investment and a real opportunity for the NYSE Group to help those companies raise capital - something she said was made easier by the exchange's merger with Archipelago, an electronic trading platform now known as NYSE Arca. "The merger gives us a chance to broaden our listing standards and to be able to bring into the NYSE group, with Arca, some of these young companies," Kinney said. Many of those young companies are Israeli and Kinney believes the NYSE is the right place for them to list their shares. Currently, Koor Industries, Blue Square Israel and Tefron are the only Israeli companies listed on the Big Board. "I think many of the companies that will come to the US markets over time probably will be looking at making acquisitions of US companies, so we want them to have a very strong valuation and currency, and I think that's something we can provide," said Kinney. She has Dan Matalon convinced. "It's overwhelming to see the size and potential of the US market," said Matalon, one of the owners of Rosh Ha'ayin-based EPRS Ltd., a provider of electronic pre-paid recharge services for cell phones that presented at InnovaTech. Matalon said an initial public offering for EPRS was likely two to three years down the road. He plans to do so on the NYSE and said he might even move the company's headquarters to the States because of what he called the "many political barriers to business in Israel." For now, the three-year-old company, which has subsidiaries in Romania and India, hopes to reach 25 more countries and is looking for $10 million to $15m. in financing to do so. Not everyone at the conference was confident New York was the right choice for going public, however. "The market here [New York] would be a natural choice, but because of financial hardships we are looking for other sources," said Menahem Livni, chief executive officer of Tel Aviv-based DocsEra, which provides on-line search solutions that make newspaper advertising accessible over the Internet. Livni, who is planning to take the company public in about six months, said the that would happen on London's AIM. ," he said. "The expenses associated with those strict regulations and accounting costs are too high. Start-ups can't afford to put up 20 percent of their income just for these regulations." Nevertheless, Livni says AIM is not an ideal choice. "AIM is problematic. It's not really the right way, but companies are under financial stress to fuel operations so they will go that way." For DocsEra, he said, it was just one stage before the company eventually moved on to the NASDAQ, when it's able to meet its listing qualifications. Close allies Already boasting 75 listed Israeli companies, the NASDAQ held its first ever joint exchange conference with the Tel Aviv Stock Exchange on Thursday, allowing companies including Leumi, Teva, Saifun Semiconductor, Israel Chemicals and Delek Group to deliver their messages to Wall Street. "The overall interest was incredible," said Ronit Harel Ben-Ze'ev, senior vice president at the TASE, who said she had been told by attendees that they previously had been focused on technology but that "this was a wonderful opportunity to see the other types of companies" Israel had to offer. NASDAQ Managing Director for Israel Asaf Homossany said the conference was part of the exchange's ongoing efforts to support Israeli companies and to provide access to American investors. "We were the first to list an Israeli company 25 years ago and have constantly supported and been committed to the market since," Homossany said. Attendees of the NASDAQ TASE Investor Conference also heard from Ester Levanon, chief executive officer of the TASE, and Bank of Israel Governor Stanley Fischer, who touted the strength of the country's economy in the wake of the war. It's a number any European government would be happy to have and the US government would probably be happy to have, Fischer said, referring to the 4.2% growth rate the central bank forecasts for 2007, despite it's having been cut to reflect the conflict. The events culminated with a reception sponsored by the TASE and the Economic Mission at which Fischer reiterated his comments and New York State Comptroller Alan G. Hevesi explained why he's been so eager to invest the US's second largest pension fund's resources in Israel. "Not because I'm a Zionist and not because my grandfather was a rabbi and not because America is a close ally. That's all important and that catches your attention, but because I'm a fiduciary and my job is to produce a return on investment... and investing in Israel is very good business," said Hevesi who has more than $1 billion invested in the country, including $540m. in State of Israel bonds. Levanon and the TASE delegation also met with Kinney and other NYSE officials during their visit. What war? Yair Shiran, economic minister to North America, said it was very important to hold these events to demonstrate Israel's economic resiliency, particularly after the war, but the fact that the country has just emerged from a major conflict seems to have done little to derail enthusiasm for investment in Israel. "On a tactical level, nothing has changed," said Ranan Lachman, vice president investment banking at Oppenheimer & Co., who focuses on Israeli companies and attended the InnovaTech conference. Lachman said his firm had eight deals in the works involving Israeli companies - five initial public offerings, two "decent sized" mergers and one financing. Yaakov Neeman, former finance minister and justice minister, told InnovaTech attendees that during his two days in New York he had received five offers from multinational companies to invest in Israeli firms - four in the hi-tech area and one in the insurance business. The mood at the conferences confirmed the tremendous interest in the country. "I think that investing in Israel at this point is a very good idea. I would like to tap into that market," said Dina Niron, who works in business development for the New York-based Platinum Funding Group. Platinum's investments generally range between $1m. and $100m. "In light of the difficult situation the country just went through with the war, many companies might need that extra push and we could provide that," she said. Edward G. Jones, Jr., of New York's Edward G. Jones & Co. LLC , which provides companies with business development and financing services, also is bullish on Israel. "There's a very deep current of entrepreneurship. It's exciting," Jones said, mentioning in particular the people and their creativity. The 24 companies that participated in the InnovaTech conference traveled on to Los Angeles for two days of meetings with technology giants such as Yahoo and Google.


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