Israeli Government Plans Major IPOs for Defense Giants Rafael and Israel Aerospace Industries

The Israeli Government Companies Authority is advancing plans for record-setting initial public offerings (IPOs) of two major defense companies, Israel Aerospace Industries (IAI) and Rafael Advanced Defense Systems. IAI is valued at approximately 100 billion shekels, while Rafael's valuation is estimated between 60 and 70 billion shekels. These IPOs would place both companies among the top six on the Tel Aviv Stock Exchange. The Authority is optimistic about completing IAI's IPO in the coming months, although issues remain regarding disclosure requirements mandated by the Israel Securities Authority. Both companies are requesting full or partial confidentiality for sensitive transactions.

Elinor Damari, head of finance and control at the Government Companies Authority, expressed optimism about the progress, noting recent significant advances and government approval. The Authority is also exploring a dual listing on both the Tel Aviv and New York stock exchanges, similar to other leading Israeli firms. If regulatory disagreements persist, the Authority may seek legislative solutions through the state budget law.

The Authority's 2025 annual report highlights the growing economic importance of the defense sector, with Rafael's revenues rising 21% and IAI's by 13%, contributing to a record 113 billion shekels in total revenues for government companies. Net profits increased by 28% to 9.8 billion shekels, with dividends to the state rising to 1.61 billion shekels. The report also reveals salary data: Rafael leads with an average monthly gross salary of 22,700 shekels for regular employees and 85,100 shekels for executives, followed by IAI and other major government companies.

The report addresses other issues, including the ongoing review of the sale of the shipping company ZIM to German firm Hapag-Lloyd, which faces security and labor opposition due to significant Saudi and Qatari ownership stakes. The Authority oversees 70 government companies, including major players like the Israel Electric Corporation, Mekorot, and Ashdod Port.

Additional findings include high employment of relatives in some companies, with Mekorot having 38% of its workforce related, and low female representation in senior management, with only 17% at Ashdod Port and IAI. The Authority acknowledges the need for improvement in diversity and inclusion. Under CEO Roy Kahlon, appointed in November 2024, the Authority has increased transparency and is pushing for efficiency, privatization where appropriate, and better financial management across government companies.