Wall Street beckons new wave of Israeli tech IPOs

• Published date: 11 April 2024
• Author: Assaf Gilead
• Publication title: Globes (Rishon LeZion, Israel)

Danny Akerman, a former investment banker with Goldman Sachs and cofounder and managing partner of global investment firm Key1 Capital, which focuses on tech growth companies, tells "Globes" that the performances of the likes of Reddit and Astra Labs since their IPOs have "Stimulated the appetite required by investors to invest in additional flotations."

"It seems that the conditions are ripe for the start of a new wave of IPOs," adds Akerman. "In recent months we have seen a significant stabilization of the economy in the US and an expansion of growth, inflation that is in a general downward trend, a halt in interest rate hikes, and the stabilization of the multipliers in the capital market. In addition, the fear index (VIX) has consistently stayed below 15 points, mainly since the start of the year."

Cato Networks has chosen its banks

The first wave of Israeli tech IPOs is expected from October onwards for4 high growth companies with revenue already in the hundreds of millions of dollars. Cybersecurity company Cato Networksfounded and led by entrepreneur Shlomo Kramer, is the most advanced Israeli company in its plans for a Wall Street IPO. It is already in what is termed in the industry as the 'beauty contest' stage, in which it is choosing who will be its investment bankers that will act as underwriters.

"Reuters" reports that the Israeli company has chosen Goldman Sachs and JP Morgan and that now it is writing the prospectus for the US FCC regulator. After the prospectus is approved, Cato will be ready for its flotation within a short while. In principal, Cato could be ready for an IPO within a few months but the company will likely delay the flotation until it is convinced that the IPO market is stable.

At the end of 2022, Cato reported annual recurring revenue (ARR) of $100 million, with annual growth of 60%, which means that by the end of 2024 ARR might be as high as $260 million. For the sake of comparison, prior to holding its IPO in 2021, Israeli cybersecurity company SentinelOne (NYSE: S) reported ARR of $90 million, although its accounting revenue was closer to $120 million.

Not far behind Cato is Israeli-US cybersecurity company Snyk, which raised money from the Qatari royal family before the war in Gaza. The company, which conducts itself under the radar and does not disclose figures, is working to file a confidential prospectus but has not yet chosen underwriters.

Market sources believe that two other Israeli companies that considered an...