Nasdaq Dives Into Israel Tech Boom With TASE Pact Deal with Tel Aviv exchange could answer critics of Israel’s shallow financial system By Orr Hirschauge
http://www.wsj.com/articles/nasdaq-dives-into-israel-tech-boom-with-tase-pact-1452087667
TEL AVIV— Nasdaq Inc. is jumping into Israel’s tech boom.
The stock-market operator said Wednesday it is joining forces with the Tel Aviv Stock Exchange in a venture to nurture startups, including offering advice and mentoring for private, growth-geared companies and creating an exchange here to help them raise capital.
The move comes amid long-standing complaints among Israeli startup founders and investors that the country lacks the infrastructure to foster stock-market listings for its exploding technology sector. Instead, critics say companies have been forced to seek listings overseas, particularly in the U.S., or sell themselves to foreign firms to raise capital and keep growing.
The two exchange operators described the new Tel Aviv exchange as a private, “secondary market for liquidity events and debt financing services.” Nasdaq said more details about the new market will be disclosed early this year.
Gal Landau-Yaari, chief risk officer at the Tel Aviv Stock Exchange, or TASE, said the new exchange will help connect foreign investors and Israeli companies, offering investors access to private shares, debt and secondary offerings. The exchange announcement coincided with a separate agreement by TASE to use Nasdaq technology for stock, derivative, bond, fixed-income and commodities trading, as part of an overhaul to attract more Israeli and foreign listings.
The Tel Aviv exchange lists 461 companies with a combined market capitalization of about $200 billion. But it is dominated by companies controlled by some of Israel’s richest families and oligarchs. The exchange hasn’t attracted much interest from the bevy of technology startups and tech investors that have emerged in recent years in Israel.
The country has given birth to a vibrant tech-startup culture, thanks in part to a technology-savvy military that has spawned a generation of inventors, small-business founders and investors. Bigger tech 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 route 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 previous year. 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.
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