Israel’s tech firms saw a 520% surge in the number of exits in 2021, reaching a total value of USD 82.4 billion, up from USD 15.4 billion in 2020, according to an annual exits report published last week by consultancy firm PwC Israel.
The number of exits has so far soared to 171 deals, up from 60 last year, which included 99 acquisitions for a total value of USD 11.5 billion. The country also saw 72 companies going public, including special purpose acquisition companies (SPAC) mergers. Among them, 45 of those IPOs were done on the Tel Aviv Stock Exchange (TASE).
According to Yaron Weizenbluth, partner and head of the high-tech cluster at PwC Israel, nobody could foresee what COVID-19 would do to the technology market in 2021. However, despite the struggles, the market remained resilient with numbers that turned out to be better than expected.
“In the previous year, at these very days, we concluded a report about what a wonderful decade it was for Israeli high-tech. The rapid adaptability and resilience of the local technology market gave signals already in the second half of 2020, when the world was facing economic and social struggles that presumably only happen once in a few hundred years,” Weizenbluth said.
“Our predictions were very optimistic and relied on our familiarity with the capabilities and resilience of the local industry, but it was not predicted the degree of success we experienced at the beginning of the third decade of this millennium. The numbers speak for themselves.”
An exceptional year for IPOs
2021 was the year of IPOs. The IPO record includes 72 offerings, totaling approximately USD 71 billion, compared to just 19 offerings in 2020 for a total value of USD 9.3 billion. The average price per IPO also experienced growth, increasing to USD 985 million compared to USD 489 million in 2020. This was mainly due to listings in the US, including SPAC listings.
The highest valued offering was for Israeli advertising tech firm ironSource, which began trading on the New York Stock Exchange in June after merging with US SPAC Thoma Bravo Advantage in a deal that valued ironSource at USD 11 billion. Israeli security company SentinelOne was next on the list, completing its high-rated offering with a valuation of USD 9 billion. The same month, Monday.com also completed its offering valued at USD 6.8 billion.
There was also an increase in the number of IPOs on the local stock exchange, with 45 tech firms going public. The main one was Israeli fintech company Nayax, valued at USD 1 billion, and Israeli software company Glassbox, valued at USD 350 million.
The report did not include follow-on deals or deals where a company offers shares after an IPO. If they had, the value of tech exits would have amounted to USD 99.2 billion in 2021, compared to just USD 17.1 billion in 2020. The most notable follow-on deal is the USD 13 billion IPO by Israel-based digital entertainment company Playtika.
A record year for acquisition deals
This year was also a record-breaking one for acquisition deals—99 deals were made totaling USD 11.5 billion, an increase of 180% compared to 2020. Acquisitions include the USD 600 million deal by Francisco Partners for Israeli online genealogy platform My Heritage in February.
The number of local acquisitions also increased with 32 deals, jumping from 11 back in 2020. The most notable ones are Israeli cloud email security software company Avanan by Check Point Software and security firm Vdoo by JFrog.
“The Israeli market today seems much more selective,” said Weizenbluth. “I believe that 2022 will be relevant to certain large and well-established companies. As a result, we will also experience a decrease in IPOs.”
“However, according to our estimates, in the second half of 2022—early 2023, we will again see excellent Israeli tech companies choosing to enter the front door of the US stock market in the process of an IPO,” Weizenbluth said.
The article was originally published by NoCamels, a leading news website covering breakthrough innovation from Israel for a global audience.