Iron Dome and Iron Beam maker Rafael moves closer to a possible IPO
Government opens preliminary talks as Israel reassesses ownership of strategic defense assets.
The Government Companies Authority is expected to hold discussions in the coming days with Rafael Chairman Yuval Steinitz and CEO Yoav Turgeman regarding the company’s preparations for a possible initial public offering, Calcalist has learned.
Rafael is fully owned by the state and develops and manufactures the Iron Dome, David’s Sling, and Iron Beam air defense systems. Iron Beam, which is based on a high-power laser, is expected to be delivered to the IDF in the coming days.
According to people familiar with the matter, the decision to open discussions on a potential Rafael IPO was made last week at a meeting attended by Prime Minister Benjamin Netanyahu, Defense Minister Israel Katz, and the minister responsible for government companies, David Amsalem. Iמ August, Calcalist reported that Steinitz had been pressing the Ministries of Finance and Defense to allow an IPO, following progress in plans to take Israel Aerospace Industries (IAI) public.
If IAI’s IPO ultimately proceeds, Rafael would be the only one of Israel’s three largest defense companies to remain a wholly government-owned firm subject to extensive regulatory restrictions. Such restrictions do not apply to publicly traded companies. Steinitz has warned that under those circumstances, Rafael’s ability to compete with Elbit Systems, controlled by Mikey Federman, and with IAI would be significantly weakened.
In recent months, the Government Companies Authority has been hesitant about advancing a Rafael IPO in parallel with efforts to float IAI. The central obstacle is the classified nature of a significant portion of Rafael’s activities. While IAI already has bonds traded on the Tel Aviv Stock Exchange and publishes financial statements, Rafael would need to begin the IPO process from scratch, including the preparation of a prospectus and a company valuation.
Until now, Rafael has been unable to conduct a valuation due to the secrecy surrounding parts of its operations. In closed-door discussions, Steinitz has argued that effective mechanisms can be established to allow the company to go public while safeguarding classified activities. A recent request by Government Companies Authority Director Roi Kahlon to Rafael’s management, made as part of preliminary IPO preparations, suggests that initial conclusions on the matter could soon be presented to professional bodies in the relevant government ministries and to the Ministerial Committee for Privatization Affairs for approval.
