Israel Says Aerospace Industries Plans $800 Million IPO in 2017

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  • IAI seeks Tel Aviv listing; company worth about $3.2 billion
  • Planned IPO would be largest new listing in Israel in 10 years

Israel Aerospace Industries Ltd. is planning to raise as much as $800 million in an initial public offering next year, according to the head of the government authority that oversees the state-owned weapons manufacturer.

IAI, which co-developed the Iron Dome anti-missile system that blasts incoming rockets out of the sky, is seeking to sell between 20 percent and 25 percent of its shares on the Tel Aviv Stock Exchange, Ori Yogev said in an interview. The company is worth about $3.2 billion, he said.

“At this stage we are advancing with IAI’s IPO plans,” Yogev said, speaking before a communications satellite built by the company and owned by Israel’s Space Communication Ltd. was destroyed in the SpaceX launcher fire at Cape Canaveral on Thursday.

The sale would be the largest IPO on Israel’s bourse since Oil Refineries Ltd. sold $1.5 billion of shares 10 years ago, according to data compiled by Bloomberg. It also would represent a step forward in the government’s plan to privatize its largest companies.

Eliana Fishler, IAI’s spokeswoman, declined to comment on the potential share sale.

Cost-Cutting Plan

In 2014, the government approved a plan to sell about $4 billion of minority stakes in state-owned companies such as Israel Natural Gas Lines Co. and the ports in Ashdod and Haifa. IAI is seeking to sell as much as 49 percent.

IAI hasn’t hired banks to advise on the sale, Yogev said. The company is waiting until after a plan to reduce expenses that could improve performance and increase its value. That program calls for 730 job cuts and will cost between $150 million and $250 million, according to an Aug. 24 filing to the Tel Aviv bourse.

The company posted $1.74 billion in revenue in the first half, a 6 percent drop from the year-earlier period. Profit fell 22 percent to $17 million.

SpaceX Blast

While IAI works to improve its financial position by trimming costs, it may also need to contend with setbacks to future revenue. A $648 million contract to supply drones to Germany will be delayed by several months because of legal wrangling with an American defense company, Reuters reported last week, citing a letter from Germany’s Defense Ministry. IAI hasn’t received word from the German government about a delay, Fishler said.

Space Communication also said on Sunday it’s entitled to a refund of about $205 million from IAI after the destruction of the Amos 6 satellite during SpaceX’s failed launch last week. IAI, which built the satellite, said it’s insured for the loss.