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Two large companies that are traded on the Tel Aviv Stock Exchange are considering listing in the UK, Israeli-British investment house MG Equity Partners said Tuesday.
Robert Pincas, a partner at the firm, declined to identify the companies, saying it was too early to disclose the information. However, he forecast that a total of 20 companies would list on the London Stock Exchange this year, with five to eight being those that already listed on the TASE.
Last year, 19 Israeli companies registered in London and only Australia provided more listings. More than 30 Israeli companies are listed in the UK, including Partner Communications, Bank Hapoalim, Frutarom and XTL Biopharmaceuticals, all of which also hold a TASE listing. The latter two became dual-listed last year.
Until now, many Israeli companies that have registered in London have been hi-tech start-ups that listed on the LSE's Alternative Investment Market, which is designed for smaller, high-growth companies. However, Pincas believes the time is ripe for larger firms to list in the UK.
"In the last year and a half, there has been a dating process between Israeli companies and the LSE and we expect a larger number of the bigger companies to list," he said. "I think most of those them will be from the Tel Aviv-25."
"The real estate sector draws a lot of interest, and Strauss-Elite has already said it is looking at the LSE," Pincas noted, adding that retail and energy companies would also be suitable for dual-listings.
In partnership with UK investment house KBC Peel Hunt, which led the $53 million IPO of real estate company Engel East Europe last month, MG Equity is organizing a conference at the start of February to promote the benefits of dual-listing.
"It provides the ability to raise significant amounts of money at a higher [company] value than on the Israeli exchange," said Pincas, adding that in the UK there are also a wider variety of international investors and greater trading in dual-listed stocks because of arbitrage, which is the difference in the price of a share that is traded on two exchanges.
"Arbitrage creates liquidity because it creates an incentive for investors to trade on the variation in the prices on the different exchanges," he said.
Dual-listing also shields companies from total exposure to political and economic instability in Israel, such as with the illness of Prime Minister Ariel Sharon.
"Institutional investors in London care less about what is going on here than those in Israel. By dual-listing you reduce the political risk of being in Israel, although everything still depends on how a company performs," Pincas said.