Securities chairman: Israeli companies 'exits' cost state up to 3 times their value

Losses refer to benefits state might have accrued if same company had chosen to go public on Tel Aviv Stock Exchange.

Tel Aviv Stock Exchange TASE 311 (R) (photo credit: Gil Cohen Magen / Reuters)
Tel Aviv Stock Exchange TASE 311 (R)
(photo credit: Gil Cohen Magen / Reuters)
Foreign purchases of Israeli companies, referred to as “exits,” can cost the state up to three times the value of the exit deal, Israel Securities Authority chairman Shmuel Hauser said Wednesday.
“In a simulation we did at the authority, we found that for every $1 of an exit, the state loses far more than $1, and it can even reach a loss of $3 and more,” he said.
Although Hauser did not explain the methodology of the simulation, the losses apparently referred to benefits the state might have accrued if the same company had chosen instead to go public on the Tel Aviv Stock Exchange. Increasing local IPOs (initial public offerings) has been a central goal for Hauser.
“There is an important connection between raising capital on the stock exchange and growth,” he said. Taxes from locally traded stocks boost government revenues. The financial markets could also provide the government with tools for financing projects such as housing, he added.
A year ago, the ISA published a road map for increasing liquidity in the Israeli capital markets, which included taking steps such as installing new oversight on credit-ratings agencies, while deregulating others.
The first reading of a bill to reduce regulatory burden passed the Knesset two weeks ago. Hauser outlined initial steps he plans to take once the law is passed, su ch as reducing regulatory burden on small and medium-sized business by introducing exemptions in the first half of 2014 and allowing R&D companies access to the stock exchange.
Changes can also be expected at the TASE, where both CEO Esther Levanon and chairman Sam Bronfeld offered their resignations in July.
Incoming CEO Yossi Beinart started his transition into the role in November.