Israel's state-owned defense giants IAI and Rafael plan US IPO to avoid stricter local disclosure. Delegation to US in mid-July. Valuations: $33.7B and $20B. Decision by year-end.
Alpha Score of 27 reflects poor overall profile with poor momentum, poor value, moderate quality, poor sentiment.
Israel is weighing a US listing for state-owned defense contractors Israel Aerospace Industries Ltd. and Rafael Advanced Defense Systems Ltd., hoping to sidestep stricter disclosure rules at home. A delegation of government and company officials will travel to the US in mid-July to test the waters, an Israeli official familiar with the trip said.
The official, who asked not to be named because the plans are private, said the listing could be primary or dual. The government aims to sell stakes of as much as 30% in each company by year-end. IAI's valuation is estimated at about 100 billion shekels ($33.7 billion), Rafael's at about 60 billion shekels, Bloomberg has reported.
Why the US Listing Matters for Disclosure
The core reason for looking abroad: US regulators are seen as more likely to grant leeway on disclosure obligations when national security is at stake, the official said. IAI and Rafael oversee classified projects – the Arrow and Iron Dome anti-missile systems – that would be hard to detail in a prospectus without redactions. Israeli authorities have been less accommodating on that front, according to the official.
Under Israel's dual-listing arrangement, companies that debut on the Nasdaq or NYSE can seek a secondary listing on the Tel Aviv Stock Exchange while remaining subject to US rules. That structure gives the defense firms a path to public markets without full local transparency.
The Budget Deficit Connection
The sale matters for Israel's strained budget. Military spending has surged since Hamas's October 2023 attacks, and the central bank projects this year's deficit at 5.3% of GDP. Billions of shekels from the IAI and Rafael stakes would help close that gap.
Both companies reported record revenue in 2025. IAI's order backlog exceeds $30 billion, Rafael's tops $20 billion. Foreign orders make up 70% of IAI's total and about half of Rafael's.
Timeline and Risks
The delegation will meet with investors, underwriters, lawyers and regulators to assess how US transparency rules apply to classified work. No final decision has been made on timing, venue or the size of the stake sale, the official said. Plans may still change.
Rafael faces a narrower window. It still needs government approval for privatization, and parliament is expected to dissolve ahead of elections due by late October. Once a ballot date is set, the process stalls until a new government forms.
IAI's privatization was approved about six years ago but stalled over disclosure concerns. The US listing option could revive it.
Subsidiaries as a Workaround
Even if the parent companies don't list, their subsidiaries might. The delegation will also examine the potential for IAI and Rafael units to go public overseas, which don't require government approval. Each company has roughly 40 wholly or partially owned subsidiaries. Rafael already listed DSIT Solutions Ltd., a maritime security firm, on the Tel Aviv Stock Exchange earlier this year.
IAI and Rafael reported record revenue in 2025, with order backlogs exceeding $30 billion and $20 billion respectively.
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