TASE Initial Public Offering (IPO)
The TASE is the “home market” for Israeli companies interested in raising capital from the public through the issue of securities, bonds and convertible securities.
Companies offering their shares to the public for the first time (IPOs) must follow one of
three listing alternatives. The TASE puts emphasis on ensuring the correctness and fairness of trading; thus a minimum public-float value and rate is required, in addition to a minimum distribution of public holdings. Lock-up rules apply to shares held by founders and others major shareholders prior to the IPO.
In recent years, the TASE has consistently adjusted listing rules to align with those accepted around the world, taking into account the special characteristics of the Israeli economy and the companies operating in it.
For example, The TASE has recognized the need of
high-tech companies to raise funds in their early stages. Therefore, the TASE laid-down rules that enable R&D companies to offer shares to the public under particularly lenient terms. R&D companies are not required to present a certain period of activity or level of shareholders’ equity prior to IPO. Further, the minimum public-float rate is relatively low.
The TASE and the Israel Securities Authority have recently issued a series of innovative directives easing the process for small companies and for companies offering their shares to the public for the first time. The unprecedented move simplifies the listing process and reduces costs for a company in its early years as a stock exchange company.
The IPO team at the TASE is happy to provide additional information to companies considering an IPO and to others operating in the securities industry. Contact us by e-mail:
ipo@tase.co.il
The Advantages of an IPO
An IPO on the stock exchange allows companies to significantly expand their operations by raising capital and debt, through a convenient, supervised platform.
The advantages of listing on the stock exchange are:
Liquidity
Listing for trading allows founders to sell shares, change family or collective ownership structures, and to use shares as collateral for obtaining credit.
Company Share Value
Listing for trading grants the company ongoing valuation and enables the execution of mergers and acquisitions through a share swap.
A Platform for Raising Additional Capital through a Shelf Prospectus
A shelf prospectus is a financial tool customary in the advanced capital markets around the world, enabling issuers to offer securities to the public at short notice, several times over a period of three years, without going through a lengthy and expensive process of obtaining a prospectus permit for each fund raising. This option gives public companies considerable flexibility in embarking on the process of issuing shares or raising debt.
The Public as Partner
Capital raising on the stock exchange enables the public to take part in the success of the company, while the controlling core remains in the hands of the company's owners, who continue to manage the company according to their strategic and business vision.
Raising Capital through Additional Instruments
Additional Advantages of a Publicly Traded Company
Listed companies publish financial statements and other updated information, thereby making it easier to engage with banks, suppliers and customers.
The need to publish reports to the public improves the conduct of stock exchange companies. Their ability to grant options to employees may contribute to the management of human resources and the employees' commitment to the company.
Advantages of an IPO in the TASE
The IPO in the TASE has quite a few advantages compared to an IPO on stock exchanges around the world. A complete and detailed comparison of advantages and disadvantages depends on the specifics of each company. It is important to note that recently, many concessions have been approved for members who register for the first time for trading as well as for listed companies.
Initial Public Offerings (IPOs) on the TASE have numerous advantages. These include:
Cost is a significant factor when considering the possibility of listing on the stock exchange. Listing costs on the TASE are significantly lower than in the US and Europe, and the current "maintenance" costs are significantly lower than the costs abroad.
The TASE is the natural home of Israeli companies - Israeli companies are better known and more noticeable in Tel Aviv than abroad, and the TASE offers relatively significant exposure to medium size companies.
The ability of the company to reach interested investors is greater in comparison to other markets, and the ability of investors and analysts to obtain complete and comprehensive information about the company is also greater as compared to overseas markets.
Bond listing is a cheaper alternative than bank financing. Trading in bonds through the TASE is ongoing, and is considered efficient, liquid and very transparent in comparison to the global markets in which bonds are traded OTC.
Many companies from Israel and abroad identify the opportunity and the potential and choose to list in Tel Aviv.
Foreign exchanges have a large number of companies and a relatively high entry threshold so that it's very difficult for companies with low market value to stand out and engage investors. On the TASE, on the other hand, the entry threshold is low and allows small and medium-sized companies to enter the stock market and enjoy broad exposure to investors.
The TASE recently launched a new methodology for stock market indices, which aims to diversify investments from large to small and medium-sized securities, and to increase investors' interest in small and medium-sized securities. The index products that track TASE indices must purchase the securities included in the various indices as part of their cover policy.
Dual Listing
For companies already listed on NASDAQ, LSE and NYSE, the Tel Aviv Stock Exchange provides an excellent and simple solution through dual listing, so that the company receives all the advantages of the local market in a short process, without much effort on its part and without significant additional costs.
Foreign Companies
Foreign companies that are traded abroad and cannot register under the
Dual Listing Law, can be listed on the TASE according to the rules applicable to the listing of a new company, with the following changes:
- Blocking: The shareholders of a company that is traded on a foreign stock exchange for more than one year are exempt from the blocking provisions.
- The value and rate of the public's holdings: In calculating the value and rate of public holdings, the public's holdings abroad are included, and the board of directors may condition the listing by providing an inventory of securities that will allow trading in Tel Aviv.
- Examination fees and registration fees: Exemption for a new foreign company.
