For the first time in three years, Initial Public Offerings are
beginning to bloom. Power over Ethernet company, PowerDsine, made its
initial public offering on Nasdaq. The IPO is the first by an Israeli
company in New York, this year. The company raised a total of $58.65
million, at a valuation of $250 million. Investors traded the shares
at a premium over the issue price.
No sooner had the excitement died down, Radiancy Ltd. announced plans
to raise $54 million in an IPO on the London Stock Exchange, based on
a company value of $180 million. The company is devoted to the
development of unique medical and aesthetic products, employing
proprietary light technology.
A market maven recently predicted, that up to 15 Israeli companies
would float their shares in 2004. Gold, apparently, has been sighted
in Israel. Nasdaq, sensitive to the prospects, has appointed an
individual to head its Israeli office in assisting in the preparation
of new issues.
To add further zest to these developments, a small drilling company
controlled by a Russian immigrant announced an oil find. The
company's shares soared, and speculation was rife as to whether
Israel had finally hit its first ever substantial oil strike. The
Heletz fields, discovered in the 1950s continue to drip only some 40
barrels of oil per day.
It seems as if this time it is the real thing! It is no Middle East
mirage. The Central Bureau of Statistics announced the export of
goods totaling $13.7 billion in the months from January to May 2004.
High-tech and mixed-technology exports continued to climb in May,
reaching $2.8 billion.
Moreover, foreign investment totaled $2.8 billion in the first
quarter of 2004, compared to just $0.5 billion in the same quarter
the year before
We all know that investment funds are what drives the technology
sector. Everyday we read of companies raising some millions of
dollars, mostly for startups.
Even Google has noticed. Just ask to find news of Israeli
high-technology companies and Google will spew out pages and pages of
news. Our Google Daily Alert came up with a dozen items.
That these events are taking place is less impressive, as many had
predicted them. What is really noticeable is the accelerated pace.
Our own guess is that over the next 12 months Israeli high-tech
companies will shatter previous export figures, will raise funds,
close to the record year of 2000 and will once again become the focus
of international merger and acquisition activity.
How can you participate in this carnival? Well, it all depends on the
depth of one's pocket. High net value investors need only to turn to
the venture capital funds specializing in Israel. Approximately 70 of
these are active on the local scene.
Initial public offerings are another way to participate.
Another avenue for investment is directly in the publicly listed
shares of venture capital companies listed on the Tel-Aviv Stock
Exchange. We recently peeked at their prices and these seem to offer
good value, with little downside risk.
Many young companies, early in their career, are more than happy to
accommodate "angel investors".
The Government announced a hidden dividend: Israel plans to withdraw
from Gaza by 2005.
And to top it all, France and Israel reportedly are negotiating the
biggest weapons deal between the two countries since the French
embargo on weapons sales to Israel prior to the Six-Day War. The
$150m. -$200m deal calls for the sale of Israeli expertise for the
manufacture in France, of Israeli drones.
There is little doubt but that "June is Busting Out All Over!" and
July may be even better.
We recently found ourselves humming the lyric "June is Busting Out
All Over" as we reviewed recent developments in the technology
sector. The famous song composed by Richard Rodgers and Oscar
Hammerstein for the Broadway theatrical Carousel brims with confidence.