Israeli Investment Firm Pasternak Shehem Plans Tel Aviv Stock Exchange IPO Valued at 300 Million Shekels

Pasternak Shehem, one of Israel's largest mutual fund management firms operating under a hosting model, has filed a prospectus to list its shares on the Tel Aviv Stock Exchange. The company, managing approximately 6 billion shekels in mutual fund assets, aims to raise 60 million shekels by offering 20% of its shares at a post-money valuation of 300 million shekels. The firm is controlled by its founders: Eran Pasternak, holding 60% and serving as chairman, and Shay Shehem, holding 40% and acting as CEO.

The IPO follows a sharp increase in profits, with net income reaching 27 million shekels in 2025, nearly tripling from 10 million shekels in 2024 and 9 million shekels in 2023. This valuation implies an 11 times earnings multiple based on 2025 profits. Profit growth was largely driven by a surge in managed assets, boosted by a rally in the Israeli stock market and new capital inflows totaling nearly 1.4 billion shekels in 2025. However, in the first seven months of 2026, the firm experienced redemptions of nearly half a billion shekels.

In addition to mutual funds, Pasternak Shehem manages investment portfolios worth around 3 billion shekels, though about half of these assets overlap with its mutual funds, placing total managed assets between 7.5 and 8 billion shekels. Revenue from mutual funds more than doubled to 56.5 million shekels in 2025, with fund management fees rising to approximately 46 million shekels. The flagship fund, Pasternak Shehem Equities, manages about 2.1 billion shekels with a 1.75% management fee, generating an estimated 37 million shekels in annual gross fees.

The company has distributed increasing dividends over recent years, totaling around 58 million shekels in three and a half years, including 21.7 million shekels in the first half of 2026. In August, the founders received restricted stock units representing 2.5% of the company’s pre-IPO equity, subject to performance conditions over four years. Their combined 2025 compensation was approximately 1.74 million shekels.

A key regulatory focus is the hosting model used by Pasternak Shehem, where investment management is separated from fund administration, currently provided by Ayalon Mutual Funds. The Israel Securities Authority issued draft regulations in April 2026 to regulate hosting arrangements, but the company cannot yet assess the impact on its operations. The IPO is being underwritten by IBI Investment House.

The timing of the IPO coincides with a record year for Israel’s mutual fund industry, which grew by 159 billion shekels (over 26%) in 2025 to nearly 597 billion shekels in assets. The industry saw strong inflows and asset appreciation, with active funds raising 28.5 billion shekels in 2025 compared to 10 billion in 2024, reversing prior years of significant redemptions.