Legal Market Overview
Israel’s legal market is tight knit, but impressively high quality and necessarily multinational. As a country of fewer than ten million residents, Israel relies heavily on its international exports to maintain the marked strength of its domestic economy, and with comparatively few natural resources, Israel’s most attractive international export is its innovation.
For many international players, any discussion of the Israeli commercial market is essentially a discussion about the tech sector. Dubbed ‘the start-up nation’, Israel has more start-ups and a larger venture capital industry per capita than any other country in the world. In addition, it is consistently ranked among the world leaders in numbers of unicorn start-ups, and foreign companies listed on Nasdaq. These two stats are even more impressive given that the two countries with the most unicorn start-ups – the US and China – have populations that are over 30 times and over 100 times larger than Israel, respectively. Each year Israel’s tech sector boasts a number of very high-value and high-profile international transactions. Perhaps the most standout deal in 2019 was the wildly successful NYSE IPO of Israeli start-up Fiverr, an online marketplace for freelance services.
Though the tech sector is undoubtedly Israel’s claim to economic fame, there are of course other commercial opportunities for international corporates. One of the largest recent M&A was not hi-tech at all, but rather involved an Israeli company originally founded in 1933, Frutarom, which was acquired by International Flavours & Fragrances for $7.1bn. International transactions aside, the domestic market also demands its fair share of complex legal work, owing partly to a number of recent legislative and regulatory upheavals.
Two developments in particular are worth noting. First, the country’s anti-concentration law (originally passed in 2013) is still affecting businesses in industries such as financial services, as Israeli banks have been made to dispose of their credit card companies. Bank Leumi sold Leumi Card to private equity in 2018, and in 2019, Bank Hapoalim sold 58.3% of its stake in Isracard on the Israeli capital markets. Valued at NIS2.7bn ($750m), the IPO of Isracard is one of the largest-ever IPOs on the Tel Aviv Stock Exchange. Second, the Israel Electric Corporation (a monopoly in the country’s power sector) is being forced to dispose of five of its power plants. At the time of writing, the Alon Tavor power plant has been successfully sold to a Chinese-Israeli bidding consortium for NIS1.9bn ($530m), and the second of five plants is currently in tender stage.
In a country where the regulatory and commercial landscape is constantly shifting, our coverage too must adapt. This year we have introduced a white-collar crime ranking; a prescient move given the corruption allegations surrounding Israel’s Prime Minister, Benjamin Netanyahu. We have also split energy and infrastructure into two discrete ranking sections. In the energy ranking, we’re looking to identify the firms that stand out across the spectrum of the country’s energy sector, and indeed, the firms receiving the highest marks will often have strengths across all steams of oil and gas activity, conventional and renewable power, and energy infrastructure developments. The infrastructure ranking seeks to highlight those firms that are taking lead roles in the country’s many ongoing infrastructure projects. As many of these projects are awaiting tender awards, the true leaders of the next generation of Israeli infrastructure will become clearer over the coming years.