In recent years, shares in fuses manufacturer Aryt Industries (TASE: ARYT) have topped the returns table on the Tel Aviv Stock Exchange, thanks to the surge in demand for its products since the outbreak of the "Swords of Iron" war. At the end of last year, the defense company, headed Haim Stapler, took advantage of the high stock price at the time to raise capital in a private placement to investment institutions amounting to NIS 900 million, through subsidiary Reshef, after the attempt to float the latter failed.
A new valuation published this week reveals a sharp drop in the value of Reshef Technologies, wiping out NIS 380 million for the institutions that participated in the placement. The heavy loss on paper comes on top of another loss for the institutions after they purchased shares of Aryt from the controlling owner Zvi Levi, when they were at a peak at the beginning of the year, for NIS 400 million. They are estimated to have made a loss on paper of about a quarter of a billion shekels, following a 70% drop in Aryt’s share price since that purchase.
Aryt’s market cap, which reached a record NIS 7.2 billion at the beginning of the year, has fallen by almost 80% to only NIS 1.5 billion (despite a rise of over 10% this week). This is mainly because of the decrease in demand for the company’s products, as reflected in the revenue and orders backlog that it reported, and a general decline in defense stocks in recent months, in view of the drop in the level of military conflicts around the world.
Offering increased to NIS 900 million
At the end of 2025, Aryt surprised the local capital market when it published a prospectus for an IPO by its subsidiary Reshef Technologies at a valuation of NIS 4.3 billion. A few days later, the company had to withdraw from the move because of strong opposition from the institutions invested in it.
This was mainly due to the fact that the move would have turned Aryt into a kind of holding company, since Reshef currently constitutes almost all of its activity, so naturally Aryt should trade at a discount to the value of its holdings. In the planned IPO, Reshef was to have received a valuation lower than that of Aryt (which had a market cap of over NIS 5 billion at that time).
In the end, Aryt decided instead on a private placement of NIS 600 million for the subsidiary, at a valuation of NIS 3.75 billion for Reshef. Among the institutions that participated in the placement were Clal, Phoenix Financial, Meitav and More. Entities that participated in the placement were given an option to purchase additional shares, which was fully exercised and brought the total amount raised to NIS 900 million.
Since that placement, the stock of parent company Aryt has fallen by almost 60%, a decline reflected for the first time in an external valuation that Aryt published this week, as part of its commitment to the institutions that participated in the offering. The valuation shows that the value of the holdings of the institutions (22%) in Reshef stood at NIS 520 million at the end of the first half of the year, which means that in less than a year there was a 40% erosion in the value of the institutional holdings, giving a loss (on paper) of NIS 380 million.
According to the valuation, carried out by Fenigstein, Cohen & Co. Financial Consulting, the fair price of a Reshef share at the end of the first half of the year was NIS 4.5. For the purpose of comparison, the valuer states that the share price according to the same model was NIS 8.5 at the end of 2025, such that it fell 46% in less than six months.
The new valuation was mainly based on the stock market price of shares in Aryt (which currently holds 77.6% of Reshef), minus other assets and liabilities of Aryt that are not related to Reshef, headquarters expenses, and a discount because of the fact Reshef shares are almost non-tradable. Since the end of June, Aryt’s share price has dropped 35%, so it can be estimated that had the valuation taken place today, it would have produced an even lower value for Reshef.
Controlling shareholder sold in time
The loss of the institutions in Reshef joins another write-down by several entities following the drop in the Aryt’s share price. In late January, controlling owner, Zvi Levyi sold 7% of the company for NIS 395 million. Levi took advantage of a 6,630% jump in three years in the share price of the company in which he bought control two decades ago for a few million shekels.
Those who bought the shares from Levi just before they hit their peak were a group of large foreign investors, who were joined by insurance companies Menora Mivtachim and Phoenix and More Investment House. Since then, as mentioned, the company's shares have lost almost 70% of their value, leaving those investors with a loss on paper of about NIS 245 million, even after taking into account the large dividends that Aryt has distributed since then.
Declining performance
Behind the disappointing returns of Aryt shares since the beginning of the year lies mainly the erosion of its performance. For the first half year, the company's revenue was NIS 133 million, 14% less than in the corresponding period last year. Its net profit dropped by 45% to NIS 52.4 million. Among other things this was because of unrealized losses on investments in securities amounting to NIS 25.5 million, which have since been made back as a result of an increase in the value of the company's securities portfolio.
Looking ahead, the company anticipates ending 2026 with revenue of NIS 340 million, 42% less than in 2025. At the end of the second quarter, the company’s orders backlog was NIS 671.8 million (including a conditional order valued at about $50 million). This figure is 10% lower than the backlog recorded at the end of 2025 and significantly below the level at the end of the same period last year (NIS 1.1 billion).
Furthermore, the company has decided to distribute an unusually large dividend of NIS 529 million. Of this amount, about NIS 317.4 million was distributed last month, while the remainder (NIS 211.6 million) is subject to court approval; this portion represents the proceeds from the sale of an 11% stake in Reshef at the end of 2025.
This decision followed an assessment by Aryt’s management, who observed the erosion in the value of their securities portfolio and concluded that it would be better to distribute the funds rather than risk further losses-even though those losses have since been fully recovered, driven by a strengthening in the markets. Added to this was a concern, expressed by some shareholders to Aryt’s management, that the funds would be used to acquire operations outside the company’s core business.
Published by Globes, Israel business news - en.globes.co.il - on October 21, 2026.
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