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The New York Stock Exchange is working on tightening cooperation with the Tel Aviv Stock Exchange in a joint bid to encourage dual listings for Israeli companies with the aim of becoming a competitive alternative to the Nasdaq Stock Market.
"On the back of a strong Israeli economy, there are great growth opportunities for Israeli companies, for most of whom the Nasdaq tended to be the default exchange until now, but we hope to provide a competitive alternative to help Israeli companies raise capital," said Catherine R. Kinney, president and co-chief operating officer of the NYSE Group at the first joint conference between the TASE and the US exchange on Wednesday in Tel Aviv. "We see a strong pipeline of initial public offerings of Israeli companies in the US and expect more Israeli companies to come to the NYSE."
Kinney added that the exchange also was seeking to attract and help young, high-growth Israeli companies that might already be listed on the local market to join NYSE Arca, the electronic trading platform launched through the exchange's merger with Archipelago, which caters to smaller companies that don't yet meet the standards for the Big Board's main list. The lower listing standards and entry requirements will be more fitting for small companies on NYSE Arca, which requires a market capitalization of $150 million compared with the NYSE's $750m. requirement.
"Cellcom's public offering on the NYSE, expected this month, will be an opportunity to show off our capabilities and we hope that additional Israeli companies will follow suit," said Kinney.
Last month, Cellcom filed its preliminary offering document with the US Securities and Exchange Commission for an initial public offering on the NYSE at an implied market capitalization of roughly $1.7 billion.
Also speaking at the conference, Ester Levanon, CEO of the TASE, was optimistic that tighter collaboration with NYSE would entice companies to consider a dual-listing, either after or before they go public on foreign markets.
"There are 13 to 14 Israeli companies which could potentially be in the pipeline for initial public offerings," said Yoram Tietz, a partner at Ernst & Young, who is expected to be appointed as the new chairman of Ernst & Young Israel replacing Itzhak Forer, who resigned this week.
Currently, Koor Industries, Blue Square Israel and Tefron have dual-listings on the TASE, while another three companies listed on the NYSE are subsidiaries of Israeli companies - Ormat Technologies Inc., Delek US Holdings and Alon USA Energy.
"A dual NYSE-TASE listing, enables companies to maximize their exposure to investors in Israel, the US and globally, while benefiting from longer trading hours, a broader investor and better liquidity pool," said Kinney. "NYSE research has shown that foreign companies listed in New York and in their home country enjoy a 30% valuation premium over foreign companies that don't have a dual listing."
The marketing move by the world's largest stock exchange comes amid a backdrop of mass consolidation between domestic and global exchanges, and the NYSE's global expansion campaign highlighted by the exchange's transformation into the first trans-Atlantic market with its acquisition of Paris-based exchange operator Euronext NV, which owns the stock markets in Lisbon, Paris, Amsterdam and Brussels.
Now, the NYSE is looking to Asia and emerging markets. The NYSE and the Tokyo Stock Exchange are embarking on an alliance and last month the NYSE Group acquired a 5% stake in the National Stock Exchange of India. It also is looking into China.
"You will see more work in Asia by the NYSE Group," said Kinney.