Nasdaq Rout Curbs 2000-Like Boom in Israeli Share Sales

The selloff in Internet and biotechnology shares is threatening to cut short the fastest start to Israeli stock offerings in overseas markets since 2000.

Wix.com Ltd. (WIX), the provider of online tools to create websites, scrapped a share sale on March 31 after the stock tumbled 26 percent that month, paring the rally since its Nov. 5 initial public offering to 39 percent. On April 4, Matomy Media Group Ltd., an online marketing company based in Tel Aviv, scuttled plans for an initial public offering in London.

Technology shares are slumping across the globe, led by a 7.4 percent plunge in the Nasdaq Composite Index (CCMP) from a 14-year high reached in March, amid concern valuations had reached unwarranted levels. The rout is being felt acutely in Israel, which has 64 companies traded on the Nasdaq, the most of any country outside the U.S. after China.

The market has become more sensitive to risk for foreign deals, Josef Schuster, founder of Chicago-based IPOX Schuster LLC, said in an April 10 telephone interview. Corporate actions are not going to be as easy as they used to be.

With stock trading slowing in Tel Aviv, Israeli companies have been turning increasingly to international markets for funding. Twelve Israeli companies raised $625 million selling shares in New York and London this year, three times the amount raised in the year-earlier period, according to data compiled by Bloomberg.

Thats the most since 2000, when nine companies raised $893 million before the so-called dot-com bubble burst, wiping out $1.7 trillion in market value on the Standard & Poors 500 Index from a September high to year-end.

Matomy, which helps publishers and app developers increase web traffic, decided to postpone its London IPO because there wasnt enough interest from European investors, Chief Executive Officer Ofer Druker told Bloomberg in an April 8 interview.

People lost their appetite to invest in companies that are in the field of the Internet, Druker said. The markets around us in the Internet sectors and also the shares of our peers went down very heavily.

The postponement was a technical setback and wont stop the company from pursuing its ambitions, Druker said in an e-mailed response to questions yesterday.

Wix.com, whose $127 million U.S. IPO last November was the largest out of Israel in six years, has seen its shares drop 32 percent from a peak of $31.32 on Feb. 27 to $21.21 yesterday. Wix, based in Tel Aviv, was undone by the market rout, and fundamentally nothing has changed for the company, Kerry Rice, an analyst with Needham & Co. Inc. in San Francisco, said in an April 14 telephone interview.

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Nasdaq Rout Curbs 2000-Like Boom in Israeli Share Sales