Brad Raymond, software team partner at US investment bank Thomas Weisel Partners, arrived in Israel on Tuesday for talks with a company that is set to make an IPO. “The number of Israeli companies making flotations is relatively small, compared with the high demand from investors,” he says.

Shiri Habib 
May 18, 06

“This is a very good time for IPOs in the software, media and telecommunications sectors,” says Thomas Weisel Partners software team partner Brad Raymond. Raymond arrived in Israel on Tuesday for a 24 hour visit during which he met with the representatives of an Israeli company, which is set to make an IPO in the coming months. Raymond naturally does not disclose the company’s name, but he says that Thomas Weisel focuses on small (under $1 billion) and medium-sized companies. The bank is represented in Israel by Magnolia Capital Partners.
”The main reason that this is a good time for flotations is the fact that there is currently no balance between supply and demand,” explains Raymond. “The number of Israeli companies making flotations is relatively small, compared with the high demand from investors. Recently, we have seen an increase in the number of IPOs, with 17 flotations of software companies completed only last week. This was one of field’s strongest weeks ever.”
Raymond believed that the market’s current dynamism is good for small companies. “The current situation enables small companies to float at a fairly early stage, and I definitely expect that we’ll see more IPOs in the near future.”
Globes:What are the current trends in the media, telecommunications and software sectors?
Raymond:”One trend we are seeing is the multitude of financial sponsors and the large number deals worth in excess of $1 billion. Another trend, common to all sectors, and which has a substantial influence on all activities, is consolidation. In the software market, for example, 10 years ago, big companies did not tend to acquire smaller companies. Today we are seeing a trend towards outsourcing of R&D activity in the sense that the big companies are acquiring smaller ones that supply them with technology. One such example is the acquisition of Israeli start-up Identify SoftwareIdentify, by BMC Software Inc. (NYSE: BMC).”
Raymond’s mention to this particular deal is no coincidence. The $150 million cash acquisition of Identify several weeks ago, was Magnolia Capital and Thomas Weisel’s first merger in Israel, with Raymond serving as financial consultant to Identify.
You have given this deal as an example, yet at the same time you say that actually, the market today is suitable for IPOs.
Obviously, the choice between M&A or IPO depends on the company’s preference. Two years ago, there was no market all for IPOs, so small companies that wanted to achieve liquidity usually offered themselves as acquisitions. This situation has changed over the last 12-18 months, and there is now a market for small, growing companies.”
What sort of companies are you looking for in Israel?
”I’m focusing on software, media, and telecommunications, and I look for the things that investors also look for: a company with high rates of growth, profitable or breaking even with profitability foreseeable in the future, and one with visibility in its market and growth rates.”
How do you think the Iscar-Warren Buffett deal will affect Israeli companies?
”The deal has highlighted the strength of Israeli companies and the Israeli market. This is an excellent market in the fields in which we operate, especially technology and healthcare. There are a lot of excellent companies in Israel and lots of opportunities.”
Published by Globes [online], Israel business news - www.globes.co.il - on May 18, 2006
© Copyright of Globes Publisher Itonut (1983) Ltd. 2006