JERUSALEM (Reuters) – Israel’s securities regulator is banking on U.S. financial services group Jefferies’ membership on the Tel Aviv bourse to help boost initial public offerings from the country’s high tech companies.
Jefferies joined the Tel Aviv Stock Exchange (TASE) as a member in June and in August it led the TASE’s initial public offering that valued the bourse at 710 million shekels ($205 million).
Anat Guetta, the head of Israel’s securities authority, said she expects Jefferies to underwrite high tech IPOs onto TASE which has for years been shunned by many in the country’s sector in favor of foreign exchanges such as Nasdaq.
“We are at a tipping point,” Guetta told Reuters after the annual Eli Hurvitz economics conference. “We have a new foreign underwriter … The mission of Jefferies is to lead IPOs of Israeli high tech companies into Tel Aviv.”
There was no immediate comment from Jefferies.
In June, Natti Ginor, head of Israel markets at Jefferies said: “Our company has been doing business in Israel for 20 years … and we are looking forward to helping the continued growth of TASE and the companies listed on it.”
During her speech to the conference, Guetta said that while Israel’s tech sector is a main growth driver, the public is not enjoying the fruits.
“High tech companies are not going IPO in Tel Aviv and institutions invest a very small portion from their portfolios in the high tech sector in Israel,” she said, adding it was just 0.16% compared with 4-5% for foreign institutions.
“Our capital market is cut off from the success of high-tech,” Guetta said.
Most Israeli high tech firms either list on Nasdaq or other bourses, or find private financing sources and end up being bought by multi-nationals, like a deal announced on Monday when Intel Corp agreed to buy Israel artificial intelligence chip maker Habana Labs for $2 billion.
“It’s a loss for us as a county,” Guetta said, noting many Israeli companies reduce operations in Israel when bought by foreign firms. “Our economy is losing value over time.”
Israeli institutions, she said, typically do not invest in high tech due to lack of expertise in modelling tech firms.
“They are very good in real estate investing and financial but the high tech sector needs very special expertise that they lack today,” Guetta said.
Reporting by Steven Scheer; Editing by Emelia Sithole-Matarise