The Australian Securities Exchange (ASX) is likely to follow the lead of stock exchanges in the US, UK, Hong Kong, and Canada by signing a dual-listing arrangement with the Tel Aviv Stock Exchange (TASE). The arrangement allows companies whose securities are listed for trading on a specific foreign stock exchange to also list them for trading in Israel, based on their reports according to foreign law, instead of Israeli law, and to be traded as dual-listed companies. Dual listing became possible under Chapter 5C of the Securities Law, but this amendment's incidence was substantially widened early this year when the Israel Securities Authority (ISA) approved in the inclusion of the Singapore, Hong Kong, and Toronto Stock Exchanges.
The ASX has attracted quite a few early-stage Israel technology companies over the past two years. If the dual listing arrangement with the ASX is indeed signed, it will enable these companies to be easily listed on the TASE, their home market, while making it easier for companies already listed on the TASE to also be traded in Australia. The ASX strongly favors the change, and has already contacted the ISA in the matter.
ASX representatives attended a conference conducted in Tel Aviv today on the subject of offerings on the ASX conducted by law firm Pearl Cohen Zedek Latzer Baratz and accounting firm Fahn Kanne Grant Thornton. ASX executive general manager listings, issuer services, and investment products Max Cunningham said at the conference that the ASX did not differ in this context from the stock exchanges in Canada and Singapore, which already had dual listing arrangements with the TASE, and that he hoped that such an arrangement would be signed in the coming months.
In early 2018, when ISA announced the inclusion of stock exchanges in Singapore, Hong Kong, and Toronto in the arrangement, it stated, "60 dual-listed companies are included in the dual-listing arrangement. These companies accounted for 40-60% of the TASE's total market cap in recent years and over 50% of the value of the Tel Aviv 35 Index. They are also responsible for large proportions of trading volume on the TASE. Most of the dual-listed companies were not listed on the TASE before the dual-listing arrangement; they were first listed on the TASE following this arrangement."
A switch from mergers with stock exchange shells to IPOs
As of now, 18 Israeli companies in various technology fields are listed on the ASX. These include Fluence (ASX: FLC), a provider of waste purification solutions; G Medical Innovations Holdings (ASX: GMV), which develops mobile phone medical monitoring solutions; and Dragontail Systems (ASX: DTS), which provides a fast food software solution. While Israeli companies were initially listed for trading on the ASX through a merger with a local stock exchange shell, the trend has changed; companies recently listed for trading on the ASX did so by holding IPOs.
The 17 Israeli companies already listed on the ASX were joined yesterday by another: Security Matters, founded by CEO Haggai Alon. The company has begun commercializing technology that it has developed for marking various products (solid, liquid, and gas) in order to monitor them in the supply chain or ensure that they are the original product.
Security Matters raised A$6 million (NIS 15.5 million), accompanied by strong demand, and its market cap following the first day of trading in the share reached A$20 million (NIS 52 million).
"We are proud to be the 18th Israeli company listed for trading on the ASX, and I want to thank Australia for welcoming us with open arms," Alon said. He thanked the company's existing and new shareholders for their support throughout the process and promised that the company was focusing on its technology in order to build value for the shareholders.
The law firm of Afik & Co. managed the offering together with the Australian firm of Holding Redlich.
Another Israeli company that planned to hold an IPO and become a public company in recent days is Nicevend, a manufacturer of automated vending machines for frozen beverages, which wanted to raise A$5-7.5 million at a company value of A$20-22.5 million, but eventually withdrew its plans and canceled the offering.
At the same time, secondary offerings are proceeding on the ASX. Prominent in today's trading was the share of Israeli medical cannabis company eSense Lab, which yesterday reported a A$3.2 million offering. eSense Lab's share price soared 75.7% today on a high trading turnover. Even after today's rise, the company's share price is still only A$0.07, substantially lower than its $0.20 price in last year's IPO. eSense Lab's current market cap is A$5.2 million (NIS 13 million). Yesterday's offering was at A$0.03 per share.
eSense Lab today reported to the ASX that it was continuing its commercialization effort, and that following a six-month process, a UK company had decided to buy seven liters of the material produced by eSense Lab in order to include in its products. With the completion of the pilot phase, eSense Lab is planning to sign a full commercialization agreement with the UK customer. eSense Lab CEO Haim Cohen said that he was especially delighted, noting that the company was considering cooperative efforts in the food supplements market.
Published by Globes, Israel business news - en.globes.co.il - on October 16, 2018
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