Benny Landa and Erel Margalit, two veteran and well-known entrepreneurs, enjoy a positive image among investors. Among other things, this helped in completing the flotation of Highcon Systems (TASE: HICN), in which the two are the main shareholders.
Highcon, which develops digital systems for post-print processes in the folding carton and corrugated carton industry, for the production of display stands, for example, has stood out for its poor performance since being floated on the Tel Aviv Stock Exchange. Since the company started to be publicly traded in December 2020, its share price has declined by more than 50%, bringing the company to a current market cap of about NIS 200 million.
Landa and Margalit have many successes to their names in a variety of technology companies that they have promoted and financed. Landa, one of the fathers of the global digital printing industry and one of its principal inventors, was, among other things, the founder of Indigo, which was sold to HP. Margalit is the founder of the JVP (Jerusalem Venture Partners) venture capital firm, which has made many lucrative exits.
Landa and JVP currently hold 55% of Highcon in roughly equal shares worth NIS 55-60 million each.
"Until now it was done primitively"
Landa, who has been with Highcon for a long time, stresses his strong belief in the company. "I believe that if there's technology that can be disruptive, it has to be in the big markets, because it takes the same time, effort, money and risk to develop technology for a big market as for a small one. Highcon is in a big market, because packaging is a vital product, and packaging can't be produced without doing what Highcon does - cutting and folding, which until now has been done primitively.
"Highcon is a leader and a pioneer, and since the market opportunity is large, and Highcon is the market leader, it looks as though it has a promising future," Landa said.
Highcon has been around since 2009 and still hasn’t made the breakthrough. When do you think it will come?
"This is a young company. When you start a revolution in a big market, it takes time, and you need a great deal of patience. It takes time both to develop the technology and to educate the market - that's how it is when you make a fundamental, revolutionary change. I envy people who develop apps for telephones, because they can do the development in three months, reach the market after six months, and after a year float the company at a billion dollars. But developing an app is not based on deep technology and deep learning. I don’t know of any revolutionary technology that happens in a short time, but the market is starting to recognize how vital digital rather than mechanical production is for packaging, and there is starting to be significant demand for it."
Landa's other baby in digital production is Landa Digital Printing, his second digital printing company, founded after he sold the first, Indigo, to HP for $830 million twenty years ago.
Landa Digital Printing deals in digital printing on cardboard, paper and plastic, and Landa says business is going well, "thanks to very strong demand and the market need for digital printing. The vital need for digital printing is very clear today, and there's no-one in the market who doesn't understand this."
Besides Highcon, Landa has been exposed to the local capital market in recent months as the largest shareholder in GenCell (TASE: GNCL), which develops and produces green energy solutions for backup and off-grid power based on alkaline fuel cells powered by hydrogen. GenCell was listed on the Tel Aviv Stock Exchange a few weeks before Highcon, and now has a market cap of NIS 1.1 billion.
Of GenCell, Landa says, "Its activity isn’t connected to digital printing, but it concerns revolutionary technology, and that's one of the things common to all our businesses, in addition to the desire to make Israeli industry grow and produce breakthrough technologies."
Published by Globes, Israel business news - en.globes.co.il - on August 15, 2021
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