Israel IPO Expected Within a Year, Chairman Confident

Speaking at a ManpowerGroup Israel customer conference, Levy stated that the IPO is not a matter of choice but a necessity driven by IAI's growth, national uncertainty, and reported budget shortages. He believes the offering will benefit the state, the company, its employees, and international clients, with broad consensus supporting the move.

The push for IAI's IPO, alongside that of Rafael, comes as the state seeks to advance the public offerings of its two largest defense companies. Both firms have seen significant growth in revenue and order backlogs recently, fueled by demand for air defense, missile, and combat systems. The Ministry of Defense has given preliminary approval for selling minority stakes, with plans to divest up to 30% of each company while retaining state control.

IAI's government approval for an IPO of up to 49% dates back to November 2020, but the process has stalled for nearly six years. Recent progress includes the merger of its subsidiary Elta into IAI to simplify its corporate structure for public investors. However, a key hurdle remains: reconciling public disclosure requirements with the need to protect sensitive defense project secrecy. Levy indicated progress on regulatory matters, including the need for a court decision due to the classified nature of some products, but the legal process is not yet complete.

Despite Levy's optimism, the legal and regulatory issues are ongoing, with final approvals for confidentiality and disclosure agreements still pending. IAI faces a tight deadline; failure to resolve its reporting status by early December could trigger the repayment of approximately 154 million shekels in bonds and loss of its status as a reporting corporation. This underscores the uncertainty surrounding Levy's one-year timeline.

Rafael's IPO process is less advanced, lacking a final privatization decision and facing disagreements on the offering structure. Its CEO, Yoav Turgeman, noted in late August that a formal state decision is unlikely until after the formation of the next government. Both companies have strong financial performance: IAI reported first-half 2026 revenues of $4.3 billion, a net profit of $449 million, and a $35 billion order backlog. Rafael reported revenues of 10.6 billion shekels, a net profit of 663 million shekels, and a 75.8 billion shekel order backlog for the same period, suggesting significant potential IPO valuations.

Levy also discussed the complexities of state ownership, noting that IAI's multiple regulatory bodies (Ministry of Defense, Israel Securities Authority, Government Companies Authority, Ministry of Finance) limit its performance despite its success. He also addressed his transition from CEO to Chairman, emphasizing the need for conflict of interest arrangements but highlighting his experience as beneficial for continuity. Regarding artificial intelligence, Levy stated IAI develops internal AI tools due to product sensitivity, emphasizing that external tools cannot be integrated into military products. He also stressed the continued importance of the human element in development and decision-making, advocating for cautious organizational changes related to AI implementation.