Israeli Laser Firm Sivan Technologies Aims for Over $250 Million IPO

Israeli laser manufacturer Sivan Technologies is preparing for an initial public offering on the Tel Aviv Stock Exchange. The company has begun the process of selecting underwriters, engaging Poalim IBI Underwriting among others. Sivan Technologies aims for a valuation exceeding 1 billion shekels (approximately $270 million), though this is contingent on market conditions. A year ago, during a peak in the defense market, the company might have achieved a significantly higher valuation. However, if the current stagnation in defense stocks persists, the IPO could be postponed, mirroring delays seen by other defense companies like Uvision, controlled by Ronnie Frankel, which postponed a potential New York listing.

Sivan Technologies possesses unique laser manufacturing technologies. The company's controlling shareholders include its founder and CEO Eyal Shakal, who holds 26% of the shares. Ella Fund, a private equity fund managing assets for American high-net-worth individuals and overseen by investment manager Kalanit, holds 25%. An additional 23% is held by American investors through the investment bank First Manhattan Company, and Elbit holds 5%.

Plans for an IPO were previously considered over a year ago, driven by the defense sector boom and increased interest in laser systems. However, a business dispute with Elbit, stemming from a 2015 agreement, delayed these plans. The agreement stipulated mutual non-competition, preventing Sivan from developing high-power lasers for military use and Elbit's subsidiary, Elop, from competing in the civilian high-power laser market. This effectively meant all military marketing of Sivan's technology had to go through Elbit.

In June, following nine months of legal negotiations, Elbit and Sivan Technologies reached a settlement. This agreement significantly increased the royalties Elbit pays Sivan for marketing systems based on Sivan's technologies. The potential revenue in this field is substantial, evidenced by the Ministry of Defense's payment of 2 billion shekels for Rafael's "Light Shield" laser system development, with individual laser sights costing tens of millions of dollars. To proceed with the IPO, Sivan will require approval from the Ministry of Defense's security directorate regarding the aspects of its operations that can be publicly disclosed.