Business in Brief: Israeli Suit Linked to Lehman Collapse Ends With $2m Settlement
TA-100 companies leaves Israeli investors’ exposed abroad | Local tech firm Vonetize pulls Tel Aviv IPO | Tech, property pace gains for Tel Aviv shares.
Six years after a class action suit was launched against it for failing to downgrade bonds connected with Lehman Brothers, the Israeli bond rating agency Maalot S&P on Sunday reached a settlement to pay investors 8 million shekels ($2.1million).
The small sum approved by Tel Aviv District Court, was a fraction of the approximately 300 million in damages originally sought, but that was due to the fact that in the meantime trustees for the failed U.S. investment bank paid out significant claims.
The suit was filed by investors who held bonds by an Excellence investment house unit called World Currencies and by Keshet Bonds, both of which were backed by Lehman. In the suit, plaintiffs said S&P Maalot failed to lower its rating on the bonds until after Lehman collapsed. S&P Maalot defended its actions by saying it acted like other rating agencies at the time and said Lehman’s demise came as a surprise. (Jasmin Gueta)
TA-100 companies add significantly to Israeli investors’ overseas exposure
Israeli investors have greater exposure to overseas stock markets than they think, an important fact to consider at a time when Brexit fears are weighing on global stock markets, research published by the Bank of Israel on Sunday found.
While Israelis held about 269 billion shekels ($69.3 billion) in foreign shares at the end of 2015, or about 8.1% of their total financial assets, they held another 14.9% in shares belonging to the Tel Aviv Stock Exchange’s TA-100 index that also exposed them to overseas markets. Bank of Israel economists said that is because more than 53% of the sales non-financial TA-100 companies are generated abroad and those companies are far more sensitive to changes in overseas stock markets than companies that sell only to Israel.
This indirect equity exposure, central bank economists said, increases the public’s exposure to foreign equity markets by 40%. For institutional investors, it increases their exposure 15%, they added. (Shelly Appelberg)
Vonetize pulls Tel Aviv initial public offering
Vonetize, a small high-tech company of the kind the Tel Aviv Stock Exchange has hoped to attract, pulled an initial public offering at the end of last week, although it promises it will try again. The company, a maker of video-on-demand services, had cut the size of the offering to 31 million shekels ($8 million) from 58 million while slashing the value of the company by almost 60% to 119 million, but Vonetize said on Thursday it failed to enlist enough institutional investors to complete the offering.
“There was a technical problem in processing all the orders that were committed in the [share] auction,” said CEO Noam Josephides. “We plan a new auction in another week to fix the problem and compete it as planned.” However, market sources said the valuation for the company was excessive considering its revenues amounted to just $1.9 million last year, leaving it with an operating loss of $2.9 million. (Shelly Appelberg)
Tech, property pace gains for Tel Aviv shares
Tel Aviv shares ended sharply higher for a second session on Sunday, powered by tech and real companies. The TA-25 and TA-100 indices both ended the day up 1.37% at 1,431.80 and 1,245.29 points, respectively, in typically light Sunday turnover of 530 million shekels ($136.5 million).
SodaStream topped gainers on the TA-100, adding 7.4% to 90 shekels, tracking gains in New York over the weekend, but tech companies were the outstanding performers of the day, led by Mazor Robotics, which advanced 5.3% to 39.74 after Standpoint Research initiated coverage of the stock with a Buy. Gilat rose 5.25% to 16.64 while SpaceCom rose 4.6% to 35.70 after it said it won a $63 million government contract. LivePerson, which spiked Thursday on a Buy recommendation, pulled back 2.6% to 26.90, making it the biggest loser on the TA-100 for the day. Elbit Systems finished up 1.4% to 367 shekels after it won a $19 million homeland-security contract from Uruguay. (Uri Tomer)