As part of its strategy to encourage the listing and trading of high tech companies on the Tel Aviv Stock Exchange (TASE) and the implementation of the Committee to Promote Investment in Public Companies Engaged in R&D, the TASE Board of Directors approved listing rules for traded high-tech funds. The rules stipulate a NIS 400 million threshold for the initial public offerings (IPO) for such funds and require that they operate under the model of closed-end mutual funds. These funds will be entitled to invest up to 30% of the capital raised in non-traded financial assets, which may be adjusted to 50% in the future should investors be granted government guarantees to mitigate investor risk. At least 5% of the sum raised will be invested by the fund manager. The funds will be able to operate as fixed-term funds limited to a life span of 15 years.
“This new listing rules constitute an additional stage in the implementation of the R&D Committee recommendations and another measure in promoting the high-tech sector on the Tel Aviv Stock Exchange, remarked Hani Shitrit Bach, Senior VP and Head of the Listing & Economics Department, who co-chaired the Committee. “The listing of high-tech funds will provide both institutional and retail investors the opportunity to invest in a pool of Israeli and Israel related high-tech companies, mitigating the risk of investing in an individual company. I believe that once the legislative process is completed, TASE will serve as the platform preferred by high-tech companies and Venture Capitalists to raise capital.
Venture capital funds listed on US and UK securities exchanges have operated successfully for decades as closed-end funds, which are entitled to invest in non-traded assets. These countries even encourage the establishment of such funds by offering tax benefits to investors or government guarantees.
The ability to establish these high-tech funds is anchored in proposed legislation to promote investment in public companies engaged in research and development, within the framework of amendments to the Joint Investment Trust Law-1994.The bill has passed its first reading in the Knesset.
