Israeli cos raise $1.5b on Wall St in Q1

Wall Street

Kornit Digital is set to raise $100 million on Nasdaq today.

Israelis companies conducted 11 offerings on Wall Street in the first quarter of 2015: three IPOs and eight secondary offerings. An almost unimaginable total of $1.5 billion was raised, considering that $3.9 billion was raised in all of 2014.

Next in the batting order is Kornit Digital, which develops digital printing technologies for textiles. According to Bloomberg, the company 's IPO is scheduled after today's trading on Wall Street. A portfolio company of the Fortissimo Capital private equity fund, Kornit is set to issue 7.1 million shares at $13-15, raising $92.3-106.5 million (an average of $99.4 million), at a company value of $373-731 million, after money (an average of $402 million).

The IPO will not include an offer for sale. The Kornit share will be traded under the KRNT ticker symbol. If exercised, the 1.065 million-share green shoe option for the underwriters will garner the company an additional $13.8-16 million.

Founded in 2002, Kornit is managed by former Nova Instruments CEO Gabi Seligsohn, and currently has 251 employees, including 166 in Israel. The company was founded as part of the Nur group, started by Moshe Nur, and was later acquired by Fortissimo

The company's systems are used for printing on shirts, dresses, bathing suits, etc. The company's systems include the refillable products (various colors of ink) and the software used to design the required printing. "Our vision is to turn the process of printing on textiles from analogue to digital," Kornit states in its prospectus.

Kornit depends on the global textile market, which totals $1 trillion, but in which growth is slow. This number, however, is not necessarily relevant to the company, because the digital textile printing market is a niche within the global textile market, and as defined by Kornit, textiles also mean household utensils and the like. According to its prospectus, Kornit believes that most of the 33 billion sq.m. of textiles printed in the current year will be printed using analog technology, with only 2% (780 million sq.m. of printed textiles) printed digitally. This niche is projected to grow by an annual average of 20% in the medium and long term. Within this niche, digital printing on clothing will be the fastest growing niche, compared with household utensils and other textiles.

The three Israeli Wall Street 1st quarter IPOs raised an aggregate $150.5 million, and the eight secondary offering raised an aggregate $1.33 billion, including $1.03 billion in two major offers for sale by Mobileye(NYSE: MBLY) and CyberArk Software Inc.(Nasdaq:CYBR). This figure highlights the desire of the shareholders in these two companies to exchange their shares for cash as soon as US law allows (six months after the IPO).

Seven of the 11 offerings were by biomedical companies - another figure that illustrates the size of the bubble in this sector. The other four were by technology companies, including two information security companies (according to some, another sector with a bubble).

Although it would be fairer to assess the success of an offering (in other words, the return that it generates) at least a year later, "Globes" examined these 11 offerings, and found that only one had a negative return: InspireMD Ltd. (Bulletin Board: NPSR). Two offerings are at break-even (a return of less than 1%), and five have single-digit percentage returns, while three have double-digit percentage returns. The most successful offering, at least as of now, is the one by biomed company Alcobra Pharmaceuticals Ltd. (Nasdaq: ADHD), which raised $29.9 million in its third offering at $4 a share. However, Alcobra held its IPO at $8 a share in May 2013, and its second offering at $16.5 million a share in October 2013, so the success of the company's third offering is dwarfed by the share's plunge from its peak levels.

The next most successful offering is by SolarEdge Technologies Inc.(Nasdaq:SEDG), with a 22% return since trading in its share began a week ago. The company now has an $835 million market cap, giving it a place of honor among the Israeli representatives on Wall Street.

Next on the list is RedHill Biopharma Ltd. (Nasdaq: RDHL); TASE: RDHL). After listing its American Depository Receipt (ADR) for trading, the company conducted its offering, raising $12.5 million at $12.5 a share. The share is now being traded at $14.55, giving it a 16% return.

It now remains to be seen what value Kornit creates for the US investor.

Published by Globes [online], Israel business news - www.globes-online.com - on April 1, 2015

© Copyright of Globes Publisher Itonut (1983) Ltd. 2015

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