Avissaror Real Estate Plans IPO at Reduced Valuation Amid Market Cooling

Avissaror, a family-owned real estate company, is preparing for an initial public offering (IPO) on the Tel Aviv Stock Exchange, aiming to raise approximately 617 million shekels. This comes after the company agreed to lower its valuation to about 2.2 billion shekels pre-money, down nearly 20% from an earlier target of 2.6 billion shekels. The adjustment reflects a cooling local IPO market and broader market declines, which have forced many companies to reduce valuations or postpone listings.

To attract investors, Avissaror is offering free stock options exercisable at a 13% premium to the IPO price, potentially raising an additional 420 million shekels in the future. This strategy follows a trend among recent IPOs in Israel, including pharmaceutical firm Rafa, real estate company Almadav, and drone manufacturer Kando Drones. The controlling shareholders, the four sons of the late founder Moshe Avissaror, will collectively hold shares valued at around 2.2 billion shekels after the IPO. Eli Avissaror, chairman and CEO, is expected to own about 31%, with directors Yitzhak and Yoram holding 20% and 17%, respectively, and Mordechai Avissaror 10%.

Founded in 1978, Avissaror focuses on residential development, expanding recently from southern Israel into central regions, alongside commercial real estate operations. The company currently has nearly 1,800 housing units under development, with an estimated gross profit of 1.3 billion shekels. However, it still holds 33 completed but unsold units, expected to generate 77 million shekels in revenue and 21.5 million shekels in gross profit.

In Q1 2024, Avissaror reported revenues of about 265 million shekels, an 86% increase year-over-year, driven by sales in Bnei Brak and the Ashira project in Tel Aviv’s Shde Dov area. Notably, 13 of the 127 units sold in the Ashira project were purchased by Avissaror family members for 115 million shekels, representing 15% of the project’s sales to date. The company stated these transactions were reviewed against market prices by external appraisers.

Despite revenue growth, net profit fell sharply by approximately 75% to 15.7 million shekels in the quarter, mainly due to lower gross margins in the Shde Dov project and unusual financing expenses. In 2023, Avissaror’s revenues declined 37% to 423.5 million shekels, with net profit dropping 68% to 44 million shekels.