Israelis head for promised land

More companies are seeking a UK listing, says Paul Rodgers

A Rush of Israeli companies to raise funds in London is likely to continue despite the worsening political conditions at home since hardliner Benjamin Netanyahu was elected prime minister in May.

Although one new issue - the kibbutz-owned plastics company Plasson - was pulled two weeks ago when fighting broke out in the West Bank, corporate financiers are confident other listings will go ahead over the next few months.

For years Israelis felt that British investors would not back them because of the political uncertainty over the fate of Palestinians in the occupied territories. But the start of the peace process at the 1993 Oslo talks opened the gates, leading to five companies - with a combined market capitalisation of pounds 185m - joining the AIM since it was set up last year. A sixth is expected to list there before the end of this year and two more are likely to come to the London market early in 1997.

Israeli companies now make up more than a third of the 14-strong foreign contingent on the AIM, and could be close to half by the end of the first quarter next year. A year ago there were none.

In America, where investors have always taken a more favourable view of Israeli firms, the Nasdaq exchange has 58 Israeli listings - including four American Depository Receipt issues backed by securities listed in Tel Aviv - just 13 per cent of its 434 foreign stocks.

Israeli companies complain that finance is hard for them to raise at home. Tel Aviv's stock market does not specialise in smaller companies the way the AIM and Nasdaq do; venture capital is hard to come by; and interest rates are high due to a tight monetary policy to combat double- digit inflation.

One corporate finance officer with a British merchant bank said the new government in has been a mixed blessing for businesses. While Mr Netanyahu's tough stance with the Palestinians has created doubts about the peace process, his liberal economic policies are widely expected to bear fruit.

A spokesman for the London Stock Exchange said AIM is winning more Israeli business because of the one-hour time difference, compared with six hours between Tel Aviv and New York.

Ronen Levy, managing director of Selector, one of the AIM-listed Israeli companies, said he chose London because most of his customers are in Europe, so he can combine visits to analysts and brokers with sales tours.

Selector makes a valve for draft beers that cuts wastage when kegs are changed, so it has little potential in America, where most beers are sold in bottles.

The first Israeli company to receive a listing here was the computer programs specialist Dmatek, which floated last December. The other Israeli companies on AIM are BATM Advanced Communication, Geo Interactive Media and SEA Multimedia.