Leibowitz: 10-20 Israeli firms could go public in US

NYSE Euronext COO says, "there is not enough awareness in Israel about the New York Stock Exchange."

December 13, 2010 05:29
4 minute read.
Traders are seen on the floor of the New York Stoc

New York Stock Exchange. (photo credit: AP)

When Israeli companies think about an offering on the US capital market, their first thought turns to Nasdaq, not the New York Stock Exchange (NYSE) or its subsidiary, the American Stock Exchange (AMEX). Of the four Israeli offerings on Wall Street this year, three were on Nasdaq: MediaMind Technologies Inc., D Medical Industries Ltd. and Sodastream International Ltd. Only Vringo Inc. chose the AMEX.

The NYSE is well aware of this and intends to do something about it, according to NYSE Euronext COO Lawrence Leibowitz.

“Historically, there is not enough awareness in Israel about the New York Stock Exchange,” he told Globes in an interview Sunday. “Israeli companies traditionally see Nasdaq as the natural home for them. In the past, the standards for listing on the NYSE were high, but that changed when we acquired the AMEX, which opened an arena for growing companies.”

Leibowitz, who is participating in the Globes Israel Business Conference 2010 in Tel Aviv, said he would take advantage of his visit to Israel to meet local companies, venture-capital funds and entrepreneurs.

“Our activity in the US and Europe help a great many growth companies reach the public markets,” Leibowitz said. “We’ve nicely succeeded with American and Chinese companies, and now more than 50 percent of technology offerings come to us. In Israel, we haven’t told our story well to funds and investors until now.

“We’ve undergone huge changes in recent years and expanded in the global arena,” he said. “We see ourselves as a 215-year-old start-up that reinvents itself to stay relevant.”

NYSE Group Inc. made two merges in recent years: the first was with Euronext NV in 2007, to become NYSE Euronext, Inc.; and the second was with the AMEX, which targets smaller companies, in 2008.

Besides relations with Israeli companies, funds and entrepreneurs, the NYSE has an ongoing relationship with the Finance Ministry.

“The Israeli Ministry of Finance tries to help entrepreneurs turn their companies public instead of being acquired,” Leibowitz said. “Often, Israeli companies are sold to large companies before they reach the public market. This may be a good result for the entrepreneur, but it does not enable the creation of a real Israeli industry.”

Globes: In your opinion, when is it preferable for a company to be sold rather than go public?

Leibowitz: “The answer is different for each company. I think that there are a lot of companies that want to go public but at the start of the IPO process are shocked by the effort needed and conclude that it’s easier to find a large company that already knows the field and to whom it isn’t necessary to explain everything from the beginning. In this case, the process may be faster, but on the other hand, they forgo the chance of independence in the market.

“The public market has been tough and unfriendly in recent years, and the credit crunch made it difficult to obtain financing from funds. Under these circumstances, entrepreneurs might say to themselves, ‘If I can’t get financing from the funds and I don’t go public, then it’s worthwhile for me to sell.’ But the situation is now changing, and there is a place to go public.”

What industries are best suited for an IPO?

“This year, we saw offerings in a great range of industries. Internet companies have returned to the public arena, there are telecom, advertising and other companies, and there are also companies that were public and were taken private and are now considering returning to the market.

“We’re in a fascinating situation: Silicon Valley is full of companies that will hold IPOs in the next two or three years. It should be remembered that many investors are currently worried about the markets and the economic conditions, but on the other hand, interest rates are low. The more comfortable investors feel, the greater the responses to IPOs will be.”

Do you currently advise companies to begin IPO procedures?

“Absolutely, but only for companies that have a real story. A decade ago, companies went public without a business model and without a revenue forecast. Today, companies holding offerings have a real business model or component that the public can grasp. That’s the right recipe for a successful offering. Investors are cautious and are seeking real value for investment, whether among Internet, new technology or traditional companies.”

As for Israeli companies, Leibowitz believes there is a pipeline of 10-20 companies that could go public in the US in the near future.

“The Israeli economy was not affected as the US or European economies,” he said. “Looking forward, the market is looking for international companies, and Israel has always been a source of technology innovation.”

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