Israeli players pursue ASX capital
Australian investors' appetite for risk in the expanding technology sector has attracted an increasing number of Israeli companies to the local exchange.
Matt Mckenzie
matthew.mckenzie@businessnews.com.au
@Matt_Mckenzie_
TWO technology companies have become the latest in a number of Israeli businesses seeking Australian Securities Exchange listings in recent years, with $70 million raised in more than a dozen deals.
The newest entrants were Security Matters and Shekel Brainweigh, with Security listing on the ASX in mid-October after raising $6 million.
Security uses blockchain technology to track goods through supply chains and boasts prominent deal-maker John Poynton as an adviser.
Shekel, a business focused on autonomous weighing, is headed by chief executive Yoram Porat and is seeking to raise $10 million.
Both companies have tapped RM Capital as lead manager.
RM executive Nathan Barbarich said while Israel was a fantastic market for venture capital, the country's stock exchange was quite small.
"If you’re a company that can venture capital your way up to $1 billion and list on the Nasdaq (in the United States) then I think that's a perfectly logical and number one option for you, but if you’re a $10 million to $100 million company then you're too small for the Nasdaq, London, New York, even Hong Kong," Mr Barbarich said.
“Australia has become a real technology incubator in the past couple of years... a lot of the market started with them 'back- dooring' into old mining shells.“
Those backdoor deals included Sky and Space Global in May 2016, Ultracharge in December 2016 and Weebit-nano in August 2016.
About $25 million was raised through six successful backdoor deals involving Israeli businesses.
Mr Barbarich said he had worked hard to encourage Israeli businesses to list in Australia, with more potentially in the pipeline, although there were strong alternatives.
“(In Australia), we've been prepared to give people millions of dollars to dig a hole and see if there's anything at the bottom of it for many years... we're fairly comfortable with risk in our investment portfolios over here," he said.
“Perth (in particular) has a fairly entrepreneurial history."
One factor for both Shekel and Security was that they had Australian links, he said.
Shekel chief financial officer Barak Nir said the company had a manufacturing facility in China, a distributor in Newcastle and was active in other Asian countries.
"The ASX is the only western stock exchange in this area," Mr Nir told Business News.
“The ASX is a good stock exchange, one of the biggest in the world."
He said Israel and Australia had similar cultures and regulations, making the listing easier for the company.
Israel's trade commissioner to Australia, Shai Zarivatch, said that although the US was the number one destination for Israeli listings, Australia was increasingly embracing the technology sector.
"Israel and Australia are enjoying what I consider a renaissance of their relationship,״ Mr Zarivatch said.
“The country (Australia) realised that it's not where it needs to be in terms of developing its technology sector, it's not competing on the world stage with the countries it wants to compete with."
The transformation had been notable in the past two to five years, he said, driven by pro-innovation policy changes, including the federal government's decision to create a tech ‘landing pad' in Tel Aviv.
"It's a change of mindset (in Australia), that's what I sense," Mr Zarivatch said.
״(Similarly), Israel, like never before (has) realised Australia is much closer than we think.
“The culture... is something we're familiar with."
As with all listings, the Israeli set has had varying performance.
Dotz Nano, for example, undertook a raising at 20 cents a share when it vended into Northern Iron, while it was trading at 8.5 cents at the time of writing.
Battery play Ultracharge raised capital at 5 cents a share when it reversed into Lithex in late 2016, and is now trading at 1.2 cents.