Israeli Wall Street IPOs surpass $3.5b in 2014

Yossi Vinitski

2014 is shaping up to be a record year for capital raising says Hapoalim high tech head Yossi Vinitski.

The successful IPO of CyberArk Software Ltd. (Nasdaq:CYBR) on the eve of Rosh Hashana and the subsequent impressive rally in the share price follows a series of IPOs by Israeli high-tech companies, which exploited this years window of opportunity in London and New Yorks primary market. So far in 2014, Israeli companies have raised $3.5 billion on the US capital market. 2014 is shaping up to be a record year for the raising of capital.

A deeper examination shows that that the offerings are shared by veteran and mature companies with substantial sales, like Varonis Systems Inc. (Nasdaq: VRNS),Mobileye (NYSE: MBLY), Borderfree Inc. (Nasdaq: BRDR) and CyberArk, and biotech companies such as BioBlast Pharma Ltd. (Nasdaq:ORPN) and Macrocure Ltd. (Nasdaq:MCUR), which mainly raised capital in order to finance their drug development and testing programs. In either case, the capital raised will enable these companies to try and realize their potential and serve as a safety cushion to overcome obstacles and dry periods that will come in the primary market.

The high-tech companies private placement front from funds, investment companies, and angel investors also boomed, comparable to the records posted in 2000.

The rate of founding of new start-ups has been stable. The number of visiting foreign delegations, which slowed during Operation Protective Edge, quickly picked up to its normal level, demonstrating the high interest in Israeli innovation. The innovation and sale of high-tech companies is based on a uniquely supportive environment of academe, military units, the Office of the Chief Scientist, foreign corporations development centers, services providers, and more. This unique environment, the ecosystem in which high-tech companies grow and operate, exists in only a few places in the world.

As a venture capitalist, I have seen the reduction in services providers over the years, including accounting and law firms, which focus on high tech. These firms learned the unique needs of their high-tech clients and developed suitable programs that were specially priced to the payment capabilities of these clients at the different stages of their business. The foundation of this policy was a differentiated and focused service provided by an expert service provider, who spoke the language of high-tech, while foregoing small immediate profits in favor of the chance of large future profits.

It seems that the banking system, which always served high-tech companies, has lagged behind and has not made the necessary adjustments. In the past year, the banks have changed direction to reach the companies level. In the past few years, Bank Hapoalim (TASE: POLI) has been applying a strategy to deepen activity in high tech through its fintech initiative to foster financial technology companies and partnerships with the Microsoft Corporation (Nasdaq: MSFT) accelerator.

Bank Hapoalim is now expanding its services for high-tech customers with special tools customized to their needs. These changes will improve these companies work, enabling to focus more on their development and marketing challenges.

Rosh Hashana 5775, the Jewish New Year in September 2014, shows promise with pending IPOs, acquisitions, and investments in the fourth quarter of the year. These will boost the companies capital, and facilitate fundraising by investment institutions, which are showing better returns than last year, enabling them to continue expanding the industry over the coming year

The author is head of high tech at Bank Hapoalim

Published by Globes [online], Israel business news - - on October 2, 2014

Copyright of Globes Publisher Itonut (1983) Ltd. 2014

Yossi Vinitski
Yossi Vinitski
Twitter Facebook Linkedin RSS Newsletters Israel Business Conference 2018