Reversing the trend of recent years, the Tel Aviv Stock Exchange is gaining ground on the London Stock Exchange's Alternative Investment Market (AIM) as more Israeli high-tech companies are choosing their home ground to raise capital.
"While in 2005 the majority of Israeli IPO's were on the AIM, this year most have been on the TASE," said Oren Bar-On, a partner at Ernst & Young Israel, during a workshop on listing strategies at the 10th annual Journey conference in Tel Aviv Monday.
The session followed discussions outlining trends in the global wireless, semiconductor, Internet and nanotechnology markets and how they relate to Israel.
Keynote speaker Nicholas Negroponte, founder and chairman of the MIT Media Lab, cited the Israeli appetite for risk as key to the country's success in these markets, as evidenced by the high number of Israeli tech companies on foreign exchanges.
Members of the IPO panel said, however, that the recent performance of Israeli companies on international markets, in particular on the AIM, has been poor, leading to a natural movement back to the home exchange.
The AIM has been seen as first stop for Israeli companies that do not yet meet the requirements set by the Nasdaq for listing.
"The TASE has become part of the pre-Nasdaq process," said SVP Ronit Harel Ben-Ze'ev, manager of the economic department at the TASE.
"It is often advantageous for Israeli companies to first go public in their home country," she said, stressing the "home court advantage" to a company's growth strategy.
Deutsche Bank Israel's Zack Keinan said raising capital in foreign markets where the company does not conduct business might be ill-advised, as was selling shares to an investor base that didn't understand your growth story.
Keinan also warned against moving to quickly to the initial public offering stage. Israeli companies turn to the public markets too soon and should consider other avenues before going public, he said.
"Israeli companies go public long before their contemporaries in the US or Europe," Keinan said. "Good quality companies, where management has good control, should consider staying private."
Meanwhile, London-based analysts gave their own explanations for the slowdown in Israeli activity there.
"There is a much more cautious appetite from institutions for IPO's," said Adam Hart, director of communications at investment house KBC Peel Hunt. "I expect the number of IPO's to fall slightly as the [AIM] market demands higher quality offerings than in the past."
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