Israel’s Local Exchange Has a Global Focus

Tel Aviv is a center for the world’s best biotech company listings.


Israelis like to call their country a start-up nation. It helps to have a stock exchange that hosts some of the world’s best biotechnology start-ups. The chief executive officer of the Tel Aviv Stock Exchange, Ester Levanon, talks to Institutional Investor Senior Editor Jay Akasie about why international companies are listing in Israel.

1. Why has Israel come to define the biotech space, particularly among start-ups?

A few years ago we decided that to find a way for the Tel Aviv Stock Exchange to expand, to do new things, we have to find a focus. And there are areas where we cannot compete. We are not going to compete with banking or with chemicals or with other things. I thought that what we should do is try to make the Tel Aviv Stock Exchange a hub for high-tech companies. Now, I use “high-tech” in the broader sense of also including clean-tech environments. We started in that, and the idea was that once we are able to achieve critical mass, it will be easier to attract foreign companies and more foreign investors to Israel.

2. What is a critical mass?

That’s the best question you could ask, and the real answer is, at first we had no clue what it is. One day I raised my eyes and discovered that 57 companies is a real critical mass. There is no other exchange in our time zone that has so many biomed companies. So probably we crossed the line of critical mass long before. I assume that it became customary for certain companies to look to list on the exchange, and even if they didn’t have an IPO in some cases, they came through a shell company.

3. How long have you been involved with Nasdaq?

In the ’80s and ’90s, Israeli high-tech companies that wanted to go public went directly to Nasdaq. One day we realized that we have between 30 and 40 Israeli companies, very good companies, listed only on Nasdaq, and there is no way to convince them to list on Tel Aviv because at that point we need to have reports in two languages, and to act according to the rules of two sets of regulators, and that’s crazy. So it took us years to pass what we call the dual listing. And the dual listing in Israel means that if a company is listed on one of the main markets in the U.S. and also in the London main market, it can dual-list in Tel Aviv, go on reporting only in English, according to the Securities and Exchange Commission or the Financial Services Authority regulation, and not be asked to do anything additional. That makes it very easy for the companies to dual-list in Tel Aviv, and most of them dual-listed in Tel Aviv because that makes sense.

4. What is it about the Israeli market that makes it attractive for companies to list and to do business there?

The main reason is that you can behave like an American company. What we believe is that those companies, the dual-listed in Tel Aviv, will gain an additional seven and a half hours of trading, and there is no overlap between the markets. So they’ll have 13 trading hours a day, with different types of investors. There is a huge interest in Israel in biotech companies because of the big number of companies.

5. Do you consider the Tel Aviv Stock Exchange to be a local exchange with a very international focus?

Yes, well, we’re becoming very international-focused at this stage. For an American company, to tell them there is a country in the Middle East, but great in biotech and great in biomed, and they don’t have to do almost anything to dual-list — it’s not an easy task, but we are trying.