By Tova Cohen and Steven Scheer
TEL AVIV (Reuters) – The Tel Aviv Stock Exchange (TASE) will change rules and offer incentives to medium-sized companies to chose initial public offerings over mergers and acquisitions, its chief executive said, as the bourse tries to stem falling trading volumes.
The TASE – which is in the process of demutualising – has suffered shrinking trading volume and a dearth of IPOs as many companies, particularly technology firms, prefer to be acquired or to go public on Nasdaq rather than list on TASE.
A plan to privatise $4 billion in government assets – ranging from ports to defence firms – in coming years will bring fresh blood to the market but TASE Chief Executive Yossi Beinart said this is not enough.
He told Reuters he is aiming for private technology companies valued at up to 1 billion shekels (164 million pounds) that are thinking of being acquired.
According to the Israel Venture Capital Research Center, 71 percent of Israeli tech firms with annual revenue of at least $100 million (64.7 million pounds) are sold rather than go public.
In coming months TASE will follow Nasdaq’s footsteps and target small private companies by helping them manage securities issued to investors and employees, Beinart said. It would also create a private market for employees wanting to sell stock options.
Beinart will also seek to allow trading in companies such as Check Point Software that are only listed in the United States.
These shares could trade in Israel without being listed, resulting in savings for investors who can buy shares in shekels, he said, adding they can then be included in local indices and boost trading volumes by up to 30 percent.
“If companies choose to exit by being sold to a large company because they couldn’t get funding then we failed,” said Beinart, who took the reins a year ago.
TASE’s trading volume rose 3 percent in 2014 but is still only about half the 2010 average, while the number of listed companies fell to 473 from 654 in 2007.
(Editing by Susan Thomas)