“I hope that this time Israel Aerospace Industries (IAI) employees won’t delay the IPO and won’t miss it again. If IAI had been listed in 2020, today every employee would already be exercising stock options worth half a million shekels,” Roi Kahlon, director of the Government Companies Authority, told ynet and Mamon.
He spoke ahead of next week’s 50th anniversary conference for government companies, to be held in the presence of President Isaac Herzog in Rishon LeZion. One of the hottest topics at the event will be the expected IPOs, led by those of the state defense industries — IAI and Rafael.
What is the estimate for the timing and valuation of IAI’s IPO?
“We expect the IPO as early as this year with the publication of IAI’s financial statements for the first half of 2026, but on the way we have to get through the labor union and regulatory hurdles. According to our estimates, IAI is worth 100 billion shekels, similar to Elbit. Rafael’s IPO will take longer and its value is estimated at 50 billion shekels–60 billion shekels.”
What is the advantage of an IPO?
“The idea is that defense companies, which depend on international markets, have no place within a government framework. It harms flexibility because the government delays many business layers. A government company is bound by the Mandatory Tenders Law regarding suppliers, hiring is subject to salary caps, and IAI and Rafael can’t — like Elbit — bring in talent on salaries of 80,000 shekels a month, not to mention that Elbit’s CEO earns about 300,000 shekels a month while IAI’s CEO earns 72,000 shekels a month. Elbit’s CEO also has stock options, which don’t exist at IAI. Additionally, executing international deals requires government approval. Elbit, by contrast, can acquire another company within a day.”
Is there concern an IPO could expose security secrets?
“We can protect all security interests in other ways. These companies will have ‘interest orders’ — regulation that exists for a privatized company, more advanced and stricter than the golden share the state used to receive in strategically important companies that were privatized, and was willing to change in the ’90s. Among other things, it requires appointing directors with appropriate security clearances. Even Elbit has secrets, and although it is a public company, it protects them.”
What has accelerated the push for an IPO?
“Until three years ago, the situation for defense companies was not so hot. Since the Ukraine war, demand for weapons has been very high. But businesses have cycles, and a company needs to prepare for difficult times as well. Raising capital now, when the stock market is at its peak, can help during downturns. We have plans to also IPO Katzá and Tashá (Energy Infrastructure), Bank Yahav, and others over the next three years. These are going to be busy years for the authority.”