Legal market overview in Israel

Israel’s much-lauded rollout of its Covid-19 booster vaccination campaign and the country’s gradual reopening has seen its economy emerge from the pandemic in excellent shape. In 2021, the economy grew at its fastest pace in 21 years, with GDP growth hitting 8.1%. Consumer spending rose by almost 12%, and investment activity and exports also surged. It is anticipated that the economy will continue to expand, notwithstanding concerns about rising inflation and global geopolitical tensions.On the corporate and M&A front, investment activity from foreign investors was notably buoyant in 2021 and the market also saw a high volume of exits as well. The tech sector was a particular success story, with Israeli tech companies raising an aggregate total of $25.6bn. Cybersecurity and fintech companies were particularly attractive to investors. In the capital markets arena, a number of Israeli companies launched on the public markets, with a key theme being that valuations of many of these companies are exceptionally high. Market opinion is divided on whether the current level of valuations is justifiable and sustainable. Tech clients (both unicorns and smaller hi-tech companies) in particular came to market in their droves. It was a record year for TASE listings and a strong year for US listings; the two trends converged to see a record number of Israeli IPOs on Wall Street in June 2021 – both NASDAQ and NYSE saw big numbers. Also notable is that Israel created new rules that are intended to open up the market to SPACs. It remains to be seen, however, just how active the market will be for SPACs in the long term.Elsewhere, the real estate sector is a hotbed of activity. Property prices have risen, due to a combination of factors such as a scarcity of available land, the growing population in Israel and the rebounding economy. The infrastructure sector is also active, particularly in the transport arena. There is a sense that the government will continue to prioritise infrastructure investment in the aftermath of the Covid-19 crisis. Israel has an active shipping market, with over 99% of its international trade handled via its seaports. In 2021, Israel opened a new shipping port along its Mediterranean coast (the Bay Port at Haifa) that should boost the country’s credentials as a regional trade hub. Aviation, rail and road transport are also core areas of focus in the market. Also notable is that, as a self-proclaimed ‘start-up nation’, the market is increasingly operating at the intersection between hi-tech and transport, including self-driving cars, drones and AI-related matters.On the contentious side, as part of an ongoing trend, class actions continue to be a fruitful source of work for law firms. Actions relating to consumer products and data are particularly active, although there has been lots of activity across the board generally.With activity levels being strong across a number of key areas, it’s full steam ahead for law firms in Israel.