Israel Startup Nation is known for its big exits. One way for a startup to have a big exit is through an initial public offering (IPO). And the biggest ones are held on New York Exchanges like the NASDAQ and NYCE.
This may not seem like the best time to hold an IPO. The markets are down everywhere, largely due to the world financial turmoil that resulted from the Russian invasion of Ukraine feeding into high inflation everywhere and the U.S. Federal Reserve raising interest rates. Stock markets and bond markets are negatively correlated in that when interest rates rise, stocks go down. This is because bonds, which are usually a safer investment, offer higher yields so investors sell stock to buy them. It is also because higher interest rates mean growth costs more so investors expect lower profits and possible contraction.
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But Israeli firms seem to be immune to these sort of problems and are in demand all the time.
Here are three of the biggest IPO stories to come out of Israel in the month of June. All three firms are going public through an SPAC merger.
An SPAC is a publicly-traded pool of cash with no business activity other than looking for a private firm to merge with and subsequently take public. More and more companies are choosing this route for their IPOS. The idea here is that a company goes public by merging with an already existing entity, thereby saving on many of the costs involved with an IPO, as well as some of the risks.
In June Pagaya Technologies, an Israeli fintech startup, completed its previously announced business combination with EJF Acquisition Corp, a special purpose acquisition company (SPAC) for the startup’s initial public offering (IPO). The plans were first revealed in January and Pagaya shareholders approved the deal on June 16, and EJFA’s shareholders on June 17. The company now has an $8.5 billion valuation.
The newly listed public company is called Pagaya Technologies Ltd. and its Class A ordinary shares and public warrants will begin trading on the NASDAQ stock market beginning on June 23, 2022 under the ticker symbols “PGY” and “PGYWW,” respectively.
At the beginning of the month, Israeli startup Freightos, which developed a platform for comparing prices, pricing, ordering and payment for real-time transportation and shipping services, set a deal to go public via its partnership with blank-check provider Gesher I Acquisition Corp.
The merger was estimated at a market value of $435 million and will start trading on NASDAQ under the symbol FROS of Gesher and Freightos. The deal is expected to go through in the second half of 2022, pending the usual closing conditions, such as approval from Gesher and Freitos shareholders and a review by the government.
According to a statement, Freightos received $80 million in financial commitments to develop the business further and boost profits as part of the agreement.
Headquarters in Jerusalem and Barcelona Freightos platform currently serves over 10,000 importers and exporters, 3,500 freight forwarders, and 200 airlines, sea freight, and land freight.
The company’s technology addresses the challenges created in the global supply chain and enables real-time comparison of the transportation rates of different suppliers. Hundreds of thousands of orders are made through it every year. Since 2019, the company has recorded a rapid growth of 213% in orders and over 60% in gross profits.
Israeli startup Holisto Ltd, a technology based online travel booking platform, also held an SPAC merger in June. The company merged with the pre-existing SPAC firm Moringa Acquisition Corp and expects to come away with a $405 million valuation from its Initial Public Offering (IPO). Holisto will go public on the NASDAQ.
Founded in 2015 by Avi Wortzel, Eran Shust, and Shay Horovitz, Holisto was originally called Splitty. Holisto is a technology-based online travel booking platform and boasts that its tech is “disrupting the market by harnessing the power of advanced AI to make travel more affordable and personalized for consumers.”