Jeffries Advises Israeli Tech Firms to IPO First on Tel Aviv Stock Exchange

For years, Israeli technology companies that grew significantly aimed to list on Wall Street, often overlooking the Tel Aviv Stock Exchange (TASE) as a viable option. However, recent changes have prompted investment bank Jeffries to recommend that these companies consider going public first in Tel Aviv before attempting a U.S. listing. Jeffries, active in leading global IPOs on TASE, argues this approach offers a more stable entry into public markets.

Jeffries highlights that the median valuation for tech IPOs on Wall Street has risen sharply, from $1.6 billion in 2017-2019 to $5.5 billion today, with revenue thresholds also increasing substantially. This high bar makes it difficult for smaller Israeli firms to compete for attention in the U.S. market. Since 2020, only 3 of 19 Israeli tech companies that went public in the U.S. trade above their IPO price, with many losing over half their value. Jeffries warns that premature U.S. IPOs pose unnecessary risks and that a successful global IPO on TASE can lay a stronger foundation for later U.S. listings.

The bank points to improvements in the Tel Aviv market, such as extending trading to Fridays to align with global markets, which boosted trading volumes by 191% on Fridays and increased foreign investor participation to 33%. The average daily trading volume in May reached $2.4 billion. Jeffries also cites the dual listing of cybersecurity giant Palo Alto Networks, which listed on TASE in February 2023 for strategic reasons rather than capital raising, as a precedent.

Addressing concerns about liquidity on TASE versus Wall Street, Jeffries notes that consistent institutional trading over 6-12 months post-IPO is more important than theoretical liquidity. They argue that Israeli companies often achieve more stable trading environments on TASE. The bank dismisses the notion that listing in Tel Aviv signals an inability to list in the U.S., emphasizing that international investors focus on company fundamentals rather than listing location.

Jeffries concludes that Israeli growth companies can most effectively reach global markets by starting at home, citing fintech firm Nayax as a successful example of first listing in Tel Aviv before expanding to Wall Street.