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Another striking characteristic of Israel's marketplace recently was the insurgency
of IPOs, and moreover, IPOs which were conducted on foreign exchanges, primarily
the NASDAQ and AIM. 2014 included 18 IPOs for a total value of $9.8 billion. The
past year demonstrated that many Israeli companies now have the capacity and
sufficient investment attention to hold out and take the IPO route, seizing larger
returns down the road, as opposed to the exit strategy that has been popular in
the past. Mirroring this drive to persevere forward is a new culture of mature and
supportive investors adapting to the IPOculture aswell.The emerging IPOculturewill
increase the number of strong billion dollar Israeli companies (known as "unicorns"),
thus ensuring greater growth and worldwide leadership.
A significant trend has been the growing presence of local and foreign private equity
and growth oriented funds (e.g. FIMI, Fortissimo Tene, IGP, QUMRA and Apax) that
have enabled Israeli companies to raise growth capital, providing an alternative to
the acquisition route. In addition to the local players, there has been growing interest
from top tier foreign funds (e.g. KKR, Carlyle, Permira, Fransisco Partners and CVC)
that have increasingly been looking to allocate capital in Israeli companies with
the aim of earning an above average return on investment. The longer investment
horizon of private equity investors has enabled companies to continue growing and
has given rise to a greater number of IPOs.
Lastly, a welcoming phenomenon is that of the world’s leading technology
corporations, such as Microsoft, Apple, Facebook and Amazon, finding Israel, known
as a tech hub or ‘silicon wadi’, as an attractive place to set up development centers.
Themove by these tech conglomerates evidences Israel's strength and rapid growth.
The common strategy for the establishment of these development centers has
been through the acquisition of one or several local Israeli companies, which serve
as the foundation for the Israeli operations. These development centers have had
a positive impact on local employment, creating hundreds of job opportunities to
Israeli cities. These development centers are also a great source for further training
and exploiting the young talent in Israel which is eager to apply its knowledge on a
grand scale. Moreover, these development centers have been the source of some
of the leading edge technologies for their parent corporations. For example, Intel’s
main leading technological developments over the past decade have emerged
from its Israeli developments centers. Consequently, Israel and its players have
become an integral and important part of these multinational corporations, further
strengthening ties between Israel and the global market.
In response to the abovementioned trends, and more specifically regarding the
interest of Asian and other foreign investors, Israeli law firms will have to better
adapt to the changing marketplace and have quickly caught on to respond to the
needs of the changing Israeli market place. We have seen firsthand the penetration
of Asian investors into the Israeli market through investments in several of our start-
up clients, in the context of M&A, venture capital and joint ventures transactions
we are involved in, and in the context of distributorship relations and other similar
agreements that some of our big clients developed with large Chinese companies
that seek to penetrate the Israeli market. These transactions require specific
experience, expertise and cultural knowledge to efficiently manage negotiations,
transactions and post-deal relations with clients and counterparties from the Asian
market.
Following the success of the past few years, and especially 2014, and seeing the
high level of activity in the first half of the present year, we estimate that the rest of