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Nasdaq and Tel Aviv Stock Exchange Join Forces to Boost Israel’s Startups

The American Nasdaq stock market announced a joint venture with the Tel Aviv Stock Exchange (TASE) to help nurture Israeli startups, The Wall Street Journal reported (Google link) on Wednesday.

The collaboration aims to boost Israeli startups by granting them greater exposure to foreign investors on a new exchange. In the past, Israeli companies had to either list on a foreign exchange or get sold to a foreign firm in order to attract such exposure and raise the capital necessary to expand.

The country [Israel] has given birth to a vibrant technology startup culture, thanks in part to a tech-savvy military that has spawned a generation of inventors, small-business founders and investors. Bigger technology companies born here often have listed first overseas, particularly on U.S. stock exchanges, and only then at TASE, if at all.

A more typical development rout for Israeli startups has been to be acquired. Last year, 62 Israeli-based or Israeli-related companies were swallowed up, for about $7.2 billion, according to consultancy PwC Israel. That was up 44% from the year before. Some big-name deals included the acquisition by Google Inc. in 2013 of Waze Mobile Ltd., the developer of a popular navigation app, and the purchase of messaging app developer Viber Media Inc. in 2014 by Japanese e-commerce group Rakuten Inc.

Nasdaq explained in a statement that “the venture, which will operate out of Tel Aviv, will offer various benefits to private companies including strategic counseling and mentoring, exclusive networking, a secondary market for liquidity events and debt financing services. The private market will have an independent management team chosen by both exchanges.” A board is expected to be announced in the first half of 2016.

In addition to the joint venture, TASE has agreed to use Nasdaq technology for “trading across a variety of asset classes including equities, derivatives, bonds, fixed income, as well as commodities.”

Sandy Frucher, vice chairman of Nasdaq, said, “By leveraging our world-renowned Genium INET platform, TASE will have limitless opportunity to expand their product and business offerings to the domestic and international markets. Further, our collaboration to build a private market to support regional growth companies will also enhance Tel Aviv as a capital markets hub. Our own successful history creating public and—recently in the U.S.—private markets only underscores our sincere commitment to developing this new and exciting venture. We look forward to a long and successful partnership with TASE.”

Yossi Beinart, CEO of TASE, called the collaboration with Nasdaq “great news.” He added, “For the first time we can offer Israeli companies a real solution to challenges in their growth and give them a real alternative to an exit, so that they will continue to operate as independent companies with significant operations in Israel. The new joint market will offer various models for raising capital to companies not yet ripe to go public and to be a bridge for their desire to continue development in Israel and later in markets worldwide.”

This initiative complements TASE’s partnership with BlueStar Indexes on the TA-BIGITech index, which currently tracks more than 70 Israeli tech companies listed worldwide. The BlueStar TA-BIGITech Israel Technology ETF was listed on Nasdaq in early November and aims to provide the companies on the index exposure to American investors.

[Photo: Moshe Shai / FLASH90 ]