TSG Group, which makes advanced IT systems for the defense sector, has raised NIS 62 million in an initial public offering (IPO) on the Tel Aviv Stock Exchange (TASE) at a company valuation of NIS 462 million, after money. TSG is owned equally by Israel Aerospace Industries and Formula Systems (TASE: FORTY) and is managed by CEO Arik Kilman. The IPO was led by Omri Levi’s Active Underwriting.
70% of TSG’s revenue from advanced IT management systems software is produced in the defense market. TSG’s software serves the IDF and other security forces.
20% revenue growth in 2023
In 2022 and 2023, TSG completed two major acquisitions of EPR Systems (60%) and Bar Technologies (100%), which has seen the company expand activities to the commercial market. Both the acquired companies work with Israel’s 160 local authorities.
In 2023, the company reported NIS 295 million revenue, up 20% from 2022. Most of the revenue growth was organic and, according to management was in the field of command and control and intelligence activities. The acquired companies contributed to the increase in revenue. The company reported net profit of NIS 12.6 million in 2023, compared with a net loss of NIS 9 million in 2022, mainly due to the recognition of credit losses in connection with the activities of one of the company's clients. Prior to the IPO, TSG was rated A by S&P, with a stable outlook.
TSG made another acquisition recently, when it signed an agreement to buy ARTS, which designs, develops and manufactures services for electronic systems and embedded computer systems. TSG is paying NIS 12 million up front and up to an additional NIS 10 million in installments up to 2027. ARTS was founded in 1998 and is engaged in hardware and software integration of electronics systems and complex control systems. In 2023, ARTS recorded revenue of NIS 14 million.
Kilman said, "TSG’s IPO is a major milestone in the company’s development and consolidating its leading status in its areas of its activity and the realization of the growth plans in the coming years, while leveraging TSG's unique abilities, both in the defense market and in the civilian market."
Published by Globes, Israel business news - en.globes.co.il - on July 31, 2024.
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