Aryt Industries said Sunday it canceled the planned initial public offering of its subsidiary Reshef Technologies, only four days after announcing it. The company said it is instead pursuing a private capital raise for Reshef, rather than a public offering.
The reversal followed objections from major shareholders, including leading institutional investors, who contacted the company to express anger that the IPO plan had been advanced without coordination and in a way they said harmed Aryt’s shareholders. The institutions notified Aryt they would not participate in a Reshef offering.
Aryt’s shares fell 20 percent on Thursday, closing at a valuation of 4.1 billion shekels. The stock slid an additional 3 to 4 percent Sunday, bringing the valuation to 3.9 billion shekels — below the level Aryt had targeted for floating Reshef Technologies, the manufacturer of fuzes and the company’s near-sole business activity.
Calcalist reported that three insurance companies, two hedge funds and two investment houses have been in contact with Aryt and its underwriters since Thursday, pressing the company to cancel the IPO. According to the investors, they would not take part in any offering and proposed instead that Reshef raise private capital or that Aryt raise funds itself and channel them to the subsidiary. Other options under discussion included an IPO at a significantly lower valuation for Reshef or shelving the plan altogether and continuing operations without any new fundraising.
“One gets the impression the company understands it has entered a kind of no-go zone and is signaling that it is listening to the market and wants long-term relations with it. So if an IPO troubles them, the company will reassess,” a leading institutional investor told Calcalist.
Talks continued Sunday between institutional shareholders, company representatives and underwriters, with the emerging outline pointing to a private capital raise for Reshef involving the same institutions, at a valuation that has not yet been set.
Aryt is controlled by Tzvi Levy, who holds a 46.2 percent stake. Institutional shareholders with significant holdings include Phoenix and Mor, though most major institutions have positions in the company.