• Business

• The capital market in Israel

A bubble in Tel Aviv? "Issuers based on stories"

A wave of capital raising by "Dream Companies", some of which have not yet recorded income, is at the heart of the renaissance of the IPO market on the Tel Aviv Stock Exchange. Market factors: "In terms of value, the entire market is inflated, especially under the influence of what is happening in the US" "Issuance pricing is not detached from reality"

Tags

• The Tel Aviv Stock Exchange

Aviv Levy

Thursday, 07 January 2021, 06:06

• Share on Facebook

• Share on WhatsApp

• Share on general

• Share on general

• Share on Twitter

• Share on Email

0 comments

• Moroccanville at Terminal X

• Netanyahu: Close and immediate closure together with the vaccination campaign ...

• The Israeli Chamber of Commerce Forum calls on the government to impose a closure ...

• Commentator Van Jones is in tears after the victory of Joe Biden, CNN

• Post Instagram

• Lior Narkis

• Edelstein: Need to reach a full closure, not play ...

• Corona commissioner in the ultra-Orthodox sector: "Elections affect ...

• Renovation contractor talks to interior designer

• Yossi Danit Owitz - The Association for Lone Soldiers

In the video: an increase in the number of buyers in writers in preparation for tightening the closure (Photo: Yotam Rono)

The wave of IPOs of technology companies on the Tel Aviv Stock Exchange at the end of last year was a prominent sign of the surprising renaissance of initial capital raising (IPO) in the local capital market. In numbers, the stock exchange data for 2020 sums up trading over the past year by raising initial capital both technology companies and its various branches. This is a record number of IPOs, not recorded since 2007, a summary of the year was unusual and exceptional in every way, due to the crisis of sources.

among issuing news that belonged to the realm of technology includes a number of companies who came To the stock market even before they show any income, or only meager income.These are companies in areas of activity related to the hot field of green energy - such as Ecopia and Blade Ranger, which develop robots for cleaning solar installations, and other areas, including development of digital systems (icon), motors And systems for power supply (Aquarius, Gensel), Food-Tech and Agro-Tech (Millennium, Smart-Agro, Seborit), medical equipment (Extension Diary), etc. The

volume of capital raised in those issues reached hundreds of millions of shekels in some cases. High demand from institutional bodies

Seas in which they took part, and value levels that mainly reflect future potential.

This is when the underwriting market often knew how to tell about the "onslaught" of the institutionalists on the hot goods of those companies that made their way to the market.

In other words, the arrival of a large proportion of these companies on the stock exchange occurs at a relatively early stage of activity, when their issuance value is not based on their financial data, such as current cash flow, revenue volumes and profit multipliers, but on future potential growth plans. Not negligible) prior to their arrival in the market.

On the other hand, IPOs were made this year by older and more established companies, which reached the stock market more "maturity", such as the Polyram industrial company, the Israel Shipyards company, etc., where the profit multipliers on which the capital raising will be priced were quite clear. Their issuance.

More on Walla!

NEWS

"Supportive family": Beitili strengthens the lone soldiers

To the full article

"The whole market is inflated, especially due to what is happening on US stock exchanges" (Photo: Reuven Castro)

"Issues of better quality companies"

Against the background of its high demand, the issues of the technology companies that were completed on the Tel Aviv Stock Exchange recently, in the underwriting market do not rule out the possibility of a "bubble" around the pricing at which those issues were made. Among other things, the underwriting market noted that "What's happening on the US stock markets, so it's hard to determine at this stage after the crazy year we went through, whether it's a bubble or not."

The activists added, "We are in a reality today that has not been the case for many years, where it is possible to issue a stock exchange company not on the basis of numbers, but on the basis of stories. But we are not exceptional in the landscape, and the best example is to look at market issues." Nasdaq '.

However, there were still those mentioned in the underwriting market, that "now, because of the rush and the great diversity of companies that want to reach the market, the filter has become tighter, and should lead to better companies."

They said, "issues that reach now Tel Aviv are from better quality companies, some of which did not consider issuing in Israel.

But it should be understood that the IPO in Tel Aviv is not a real alternative to Nasdaq.

They all dream of issuing in the US, and raising on the local stock exchange is a round that replaces private raising, leaving the dream for Nasdaq open for them.

"Do not come from the garage at home"

Tzach Cassuto, a founding partner in the financial consulting firm Beta Finance, which was involved in about ten issues during 2020, which included mainly technology companies, believes that "the pricing according to which the issues were made is not high or detached from reality. They have something to look at in the direction of the local capital market, because if they issue abroad it will be worth $ 100 million, and if they issue in Israel it will be worth NIS 100 million. "

He adds about the pricing of high-tech issues on the stock exchange in recent months," even if they look young. Of the public market, it is important to understand that all the companies that came have a 'track record' of years in the private market, after quite a few rounds of recruitment, and with a not insignificant benchmark.

"If a company reaches an institutional body that knows it has already conducted rounds of recruitment with sophisticated investors, and shows that its value has risen from round to round, it can provide institutions with a sense of convenience on stable ground."

Another thing, according to Cassuto, is the activities of companies. Riding on global trends, so there is also somewhere to compare the activities to what is happening in the world.

Admittedly it is not a cast concrete like a supermarket, but there is definitely something to be based on here.

The pricing of those companies is not a guess. "

He emphasizes that" these are not two-person companies that come from the garage at home with a presentation, and even if in the eyes of the stock market they feel young, there is usually significant work behind them and a significant investment of millions made years ago. Usually before the sales phase. "

"Global trend - not local"

As noted, washed offerings of technology companies registrant local stock market in recent months, supported by what is happening in the US market, where the Nasdaq Composite Index breaking records thanks to the growth of technology companies that stood out during the crisis beams, allowing huge variety of offerings worth many billions of dollars.

Derived from what is happening in the US The local companies traded in the industry also enjoyed a successful year, which was reflected in impressive positive returns of about 30% -35% recorded by the high-tech indices in Tel Aviv, leading them to record levels, as well as increasing the share of technology companies in the flagship index - Tel Aviv 35.

In summary Annual, the stock exchange explained, "The corona crisis has contributed to the prosperity of technology companies - most of which are engaged in telework and e-commerce technology, and some alternative energy companies - a growing field."

Rafi Gozlan, chief economist at IBI Investment House, adds that "technology She is the great winner of the Corona crisis. This is an area that not only did not weaken, but strengthened during the crisis, because of the demand and because everything became more and more technology-based, whether work from home, orders from home, etc. When this is compounded by zero interest rates and huge government inflows, pricing is obtained, some of which will clearly not prove themselves. The effects of zero interest rates and government cash flows are very strong and create a situation that does not seem to be fixed these days. "

Gozlan said," What is happening in Tel Aviv is part of a global trend, and not something local. Maybe some people expect that because the technology companies are Israeli, then they will also be traded on the Tel Aviv Stock Exchange, but since the days of dot.com this has not been the case, and usually the heavy and large companies went to the US stock exchanges, and the smaller ones remained to issue here. "Israelis are looking at the American market."

• Share on Facebook

• Share on WhatsApp

• Share on general

• Share on general

• Share on Twitter

• Share on Email

0 comments