Israeli-Chinese firm becomes first of its kind listed on Shanghai Stock Exchange

China’s Bright Food rumored to move closer to acquisition of Tnuva.

February 11, 2014 06:14
4 minute read.
INFINITY GROUP founder Amir Gal-Or and Israeli Consul-General to Shanghai Arnon Perlman.

INFINITY GROUP founder Amir Gal-Or (beside the bell, to the right) and Israeli Consul-General to Shanghai Arnon Perlman (to Gal-Or’s left) prepare to ring the opening gong at the Shanghai stock exchange.. (photo credit: INFINITY GROUP)


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Wafer Level Chip Scale Package (WLCSP), a portfolio company of Israel’s Infinity Group, became the first company with a foreign cofounder to go public in China when it debuted on the Shanghai Stock Exchange on Monday.

At the same time, rumors surfaced that China’s state-controlled Bright Food Group was revving up talks to buy Israel’s largest dairy producer, Tnuva.

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Representatives from the Bright Food Group are on an acquisitions-focused tour of Europe, visiting London, Dublin, Brussels and Barcelona, according to the Financial Times.

Israeli media reported that representatives would be arriving in Israel this week as well.

The possible deal, which is said to value Tnuva at NIS 8 billion, would transfer control from UK-based Apax, which bought the company in 2008.

Until Monday’s IPO, Israeli shareholders controlled some 38 percent of WLCSP, whose founding investors were Infinity and China’s CVSC.

“We are honored to be the cofounders of a great company that is also a symbol of China- Israel cooperation,” Infinity Group founder and managing partner Amir Gal-Or said.


“We are exceptionally proud that WLCSP is the first company based on Israeli technology to go public in China.”

Foreign-owned companies are officially banned from China’s stock exchanges, but the country has for several years been teasing the possibility, with a senior executive at the Shanghai Stock Exchange saying in 2011 that it was “basically ready” to let foreign issuers sell stock.

Though companies operating in the Shanghai Free Trade Zone were rumored to become eligible for listing on the local exchange, that has not yet been finalized. WLCSP was not part of the free trade zone.

For Gal-Or, choosing to list the company in Shanghai was a no-brainer. “The market has the best Price-Earnings ratio in the world and the liquidity is very high,” he told The Jerusalem Post.

The fact that China would allow a company cofounded in Israel to go public in Shanghai is a small, but significant, move toward greater openness.

“They don’t do big steps, they don’t change things suddenly, they go little step by little step,” Gal-Or said.

Netanel Oded, the senior economist at the National Economic Council, said the move was “another step in the growing relationship between Israeli technologies and the Chinese market.”

Israeli leaders, increasingly looking to China as a growth market, will likely welcome the trend.

Prime Minister Binyamin Netanyahu placed strengthening economic ties with China as one of the major items on his agenda.

In addition to visiting Shanghai and Beijing in May, for a visit that focused heavily on business and economic issues, Netanyahu has met China’s Foreign Minister Wang Yi twice in the last two months, once in Jerusalem and the second time in Davos.

Oded said that Netanyahu and his Chinese counterpart Premier Li Keqiang acknowledged the significant potential for cooperation between the two countries during their meeting in Beijing in May.

“We are seeking to create an ecosystem that will create many more success stories such as this,” Oded said.

Netanyahu, during his trip to China, said “the future belongs to countries that are capable of manufacturing intellectual property” and to those that “lead in innovation and technology.”

“Israel is not as big as China,” he said. “We have eight million residents, approximately one-third the population of Shanghai. But we manufacture more intellectual property than any other country in the world in relation to its size. If we create a partnership between Israel’s inventive capability and China’s manufacturing capability, we will have a winning combination.”

But WLCSP’s public offering may be more about Infinity’s China-heavy structure than an impending opening of floodgates for Israel, said Sam Chester, an expert on Israel-China relations.

“It’s an encouraging sign, but more for symbolic reasons,” he said. “It’s not necessarily a path that other Israeli developers can easily follow to make it into China.”

Indeed, though the technology is Israeli, the company has undergone significant changes since Infinity established it in 2005 with the acquisition of Jerusalem-based semiconductor technology Shellcase, which was a failing venture at the time. Infinity renamed it EIPAT, moved its manufacturing and marketing to China and began licensing its technology. It sold off its intellectual property, but maintained a license for the China market that became the core of its business, run by CEO Wang Wei.

Gal-Or, who has lived in China for seven years, attributes the company’s success to a strong local partnership.

“At the end of the day it’s about finding the right management and partners in a growing partner,” he said of the IPO, which raised $118 million and valued the company at $1 billion.

“To bring tech to China you have to align interests. It’s more of an art than a science.”

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