Israel is preparing to sell a stake of up to 30% in its two largest state-owned defense companies, Israel Aerospace Industries (IAI) and Rafael Advanced Defense Systems, by the end of this year. This move aims to help fund the nation’s expanding military budget. The privatization effort comes after more than two decades of discussion and is being accelerated by strong wartime financial performance and rising global demand for advanced air-defense systems.
IAI is expected to be valued at approximately 100 billion shekels, or about $34 billion, and will trade on the Tel Aviv Stock Exchange. Rafael, meanwhile, is estimated to be worth 60 billion shekels, or around $17 billion, with its stake likely sold through a private placement via TASE UP. The government intends to retain control of both companies for the foreseeable future, with an initial plan to sell between 25% and 30% of each company in tranches over this year and next.
The Director of the Government Companies Authority, Roi Kahlon, highlighted the current opportunity due to the high valuations of both companies. IAI, a major producer of missile defense systems and unmanned aerial platforms, had revenues peaking at $7.4 billion in 2025, with a gross profit of $1.4 billion and net profit of $712 million. Rafael is recognized for developing the Iron Dome and the newer Iron Beam laser-based interceptor.
An Israeli delegation, including representatives from IAI, Rafael, and the Ministry of Defense, is scheduled to visit New York in July. Led by Government Companies Authority deputy head Maayan Harel, the delegation will explore the possibility of listing these defense companies on Nasdaq, potentially through a dual listing with the Tel Aviv Stock Exchange. This visit will address regulatory requirements, legal aspects, and underwriter engagement, particularly how to manage classified information that has previously posed challenges with Israeli regulatory authorities. The Ministry of Defense, which initially had reservations, has now given its consent in principle to the IPOs, recognizing the current period of peak sales as an opportune time to maximize proceeds and fund future military capabilities.
