Israeli technology companies continue to stockpile cash – some through convertible bond issues and some through share issues. A Globes survey shows that in recent months, and without initial public offerings (IPOs) made during that period, the Israelis on Wall Street have raised more than $ 3 billion.
As is well known, in the capital market issuers whenever possible: the US capital market has recovered from the declines of the beginning of the corona crisis, and now the issue window is open to new companies as well as secondary issues. In the context of bond issues, companies are taking advantage of the low interest rate environment, while the debt market is fueled by steps taken by the Federal Reserve in the wake of the corona plague.
In addition, many technology companies benefit from existing trends against the background of the epidemic: the move to work from home and the growth in online transactions requires communication infrastructures, storage solutions, security and various software solutions they provide. Their shares have been trading in a positive trend in recent months, and some of them have even reached peaks – which allows them to raise relatively little diluted share issues.
Nova will raise more than the amount it planned
Two dual companies have announced IPOs in the past two days: Nova is raising $ 175 million in a 0% convertible bond issue, while Sapiens is planning to raise $ 100 million in a share issue, just months after raising $ 60 million in expanding the Tel Aviv Stock Exchange series Spring.
Nova, managed by Eitan Oppenheim, provides measurement solutions for controlling manufacturing processes in the semiconductor industry. The company has updated that it will price the issuance of the bond for conversion and that the volume of the raising will be $ 175 million – higher than the original amount it planned to raise. % On the share price on the Nasdaq.
There is already a designation for part of the amount raised by Nova: $ 10 million will be allocated for the purchase of approximately 171,000 Nova shares in private transactions – that is, at a price of approximately $ 58.5 per Nova share, which is the same as the current price. Nova plans to use the remaining fundraising funds, among other things, for general business needs, as well as for the acquisition of complementary businesses. At the end of the second quarter, Nova had about $ 216 million in cash.
Nova shares have risen about 55% since the beginning of the year, and are trading at record levels, reflecting the company’s market value of $ 1.6 billion. Concurrent with the announcement of the bond raising, Nova raised its forecasts for the third quarter of the year, where it expects revenue of $ 68-70 million, while previously it was expected to be $ 58-66 million, and a non-GAAP net profit of $ 51 million. 56 cents a share, compared to the previous expectation of 34-47 cents, and the reports will be published on November 12.
Issuance of convertible bonds at 0% interest
Nova’s raising of 0% convertible bonds joins previous acquisitions of Israeli technology companies on similar terms. The companies take advantage of the favorable conditions in the market and are equipped with cash that will allow them to continue to grow and ensure balance sheet strength in the event of a macroeconomic deterioration.
In the event that the interest rate on the issue of convertible bonds is set at 0%, the bonds are in fact a kind of option to convert to future shares, including protection for bondholders in the event of impairment: because if the share price does not exceed the set conversion price, the bondholders ” H. In any case, they will receive the debt repayment on the due date, and if it bypasses – they will enjoy the upside.
Among the companies that recently raised 0% interest-bearing convertible bonds, we will mention the Internet company Wix, which raised $ 500 million (about two years after a previous raising of about $ 440 million, also at 0% interest); NICE, a technology solutions provider for relationship management Customers and Risks, raised $ 400 million; Solaredge, which provides technological solutions in the field of solar energy, raised $ 550 million; and Faber, which developed an online trading platform for connecting freelancers to customers, raised $ 460 million.
Faber, Thyme and Audiocodes issued shares
Sapphire, as mentioned, will now issue shares – not convertible bonds. After the company expanded an existing series of bonds in June and raised $ 60 million, it is now announcing its intention to raise $ 100 million, with the possibility of increasing the raising volume to $ 115 million, by issuing stock.
Other Israeli technology companies that have raised capital in share issues in recent months include Faber, Audiocodes and Kornit Digital.
Sapiens, under the management of Roni Al-Dor, provides technological solutions to the insurance industry. The company allocates the fundraising money to general business needs and complementary acquisitions – Sapiens is making quite a few acquisitions, and the last acquisition it made was from Delphi from the United States for $ 19.5 million.
At the end of the second quarter, Sapiens had about $ 128 million in cash, compared with a debt of $ 19.8 million in the short term and $ 98.4 million in the long term. Sapphire shares have climbed 42 percent since the beginning of the year, and the company is trading at $ 1.6 billion. At the current price of the share, about $ 32.5, a raising of $ 100 million – means the issuance of more than 3 million new shares, which will constitute close to 6% of the share capital after the issue (or more, if the volume rises to $ 115 million).
Sapphire simultaneously posted preliminary results for the third quarter, in which its revenue totaled $ 96.1-97.3 million and non-GAAP operating profit reached $ 16.6-17.2 million. Shai Zigelman, an analyst in Bank Hapoalim’s trading room, said today that Sapphire’s IPO joins several recent IPOs by local technology companies, which have shown resilience and even success during this challenging period. “In our opinion, the companies at this time see a convenient time to raise cash, even in light of the relatively high price level at which their shares are traded,” said Siegelman. Its recommendation for the stock is “Market Yield” at a target price of $ 30, lower than the current price.
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