Kiso Restaurant Chain Faces Delays as Institutional Investors Offer Lower Valuations
Kiso, a restaurant chain planning to become the first of its kind listed on the Tel Aviv Stock Exchange, is encountering challenges that may delay its initial public offering (IPO). Institutional investors participating in the company's roadshow have proposed investment valuations around 300 million shekels pre-money, approximately 25% below the 400 million shekels valuation sought by Kiso's owners. This follows an earlier target of 450 million shekels that was reduced in the prospectus.
About a year ago, Kiso raised 43 million shekels from private business figures including Oren Halfon, Eli Levy, Eitan Bar-Zeev, Chai Galis, Uri Max, and Adam Friedler, at a post-money valuation of 175 million shekels. The founders also contributed assets such as the Tialoi Hotel and an in-hotel restaurant to the company. A source close to the IPO described the owners as "strong hands" who are not in urgent need of the listing and may postpone the IPO if market valuations do not meet their expectations.
Securing an anchor investor willing to invest 30-40 million shekels at an acceptable valuation is crucial for the IPO to proceed, but no such investor has emerged yet. Market insiders note that institutional investors currently show little interest in IPOs valued under half a billion shekels, considering such raises too small to be meaningful. Kiso operates in a sector not yet represented on the exchange and is perceived as having relatively short product lifecycles.
Kiso had planned to raise about 88 million shekels at a 400 million shekel valuation, with 36 million shekels going to company coffers for expansion and 52 million shekels from selling shares by controlling shareholders Rotem Tahan and Noam Gabay. Despite ongoing conflict since 2023, Kiso's business remains stable, with projected 2025 revenues of 307 million shekels, split between deliveries (41%) and dine-in (59%). Gross profit margins are expected to decline slightly due to new restaurant openings and rising minimum wages, but net profit attributable to shareholders is forecast to increase to 25 million shekels in 2025.
Additionally, Metalicon, a manufacturer of components for defense, aviation, and aerospace industries, is also facing IPO difficulties. Initially aiming to raise 150 million shekels at a 550 million shekel valuation, market estimates now value it between 300 and 350 million shekels. Its owners, led by Shmuel Topaz, must decide whether to accept a significantly lower valuation or postpone their offering.
