Valuation Cut by a Quarter: New Real Estate Developer Lists on Tel Aviv Stock Exchange

The real estate development company, Avisror, was forced to compromise once again on its valuation as part of completing its initial public offering (IPO) of shares, at a valuation of approximately 2 billion shekels (pre-money). This comes after the company initially hoped to issue its shares at a valuation of approximately 2.6 billion shekels.

As part of the move, led by underwriting firms Leader and Apex, the company raised a sum of approximately 530 million shekels from the public in exchange for the allocation of approximately 21% of its shares. In addition, alongside the share issuance, the company issued to investors in the offering options to purchase shares, which they will be able to exercise at a price 12% higher than the share price in the offering. This results in an effective valuation for the company (which also includes the options granted without consideration) that is even lower.

In the background, in the first prospectus it published about two months ago, the company aimed to raise a sum of approximately 660 million shekels, at a valuation of approximately 2.6 billion shekels. However, since then, the local IPO market has cooled, partly due to declines in the markets, forcing a long list of companies to compromise on valuation or alternatively postpone plans to list their shares for trading. At Avisror, as mentioned, they chose to compromise and reduce the requested valuation by approximately 23% (before calculating the options).

Despite the compromise in valuation, those expected to benefit from the value creation are the controlling shareholders of Avisror, the four sons of the company's founder, the late Moshe Avisror, who will hold shares after the offering with a total value of approximately 2 billion shekels: Eli Avisror, who serves as chairman and CEO of the company, is expected to hold approximately 31% of the company's shares; directors Yitzhak and Yoram will hold approximately 20% and 17% respectively; while Mordechai Avisror will hold approximately 10%.

In addition, upon completion of the move, the company is expected to distribute 30% of the offering proceeds as a dividend to shareholders. This is expected to flow into the pockets of the brothers, who chose not to sell shares in the offering, a total sum of almost 160 million shekels. This is after the company distributed a dividend of approximately 15 million shekels to its shareholders (family members) in the last two years.

Sde Dov: Selling apartments within the family

Avisror, which was founded in 1978, deals mainly with the development of residential projects, an activity that in the past was concentrated in the southern region, but in recent years has also expanded to the center of the country. In addition, the company also has activities of developing and operating income-producing real estate (offices and commercial areas).

In the development field, Avisror holds a long list of residential projects, including almost 1,800 housing units, which are in the construction stages. These are expected to yield an estimated future gross profit of approximately 1.3 billion shekels. However, like many real estate companies, Avisror is also having difficulty selling all of its existing inventory of apartments. Thus, Avisror currently holds approximately 33 housing units in projects whose construction has been completed but have not yet been sold, which are expected to yield revenues of approximately 77 million shekels and a gross profit of approximately 21.5 million shekels.

Avisror ended the first quarter of the year with revenues of approximately 265 million shekels, an increase of approximately 86% compared to the same period last year. This is thanks to the recognition of revenues from the sale of apartments in Bnei Brak and from the "Ashira" project located in Sde Dov in Tel Aviv, for the construction of 406 housing units.

Out of the 127 apartments sold in the project, no less than 13 were sold to members of the Avisror family for 115 million shekels, which constitutes approximately 15% of the volume of sales the company has made in the project so far. The company does not state how much the family members paid per square meter, but writes that the transactions "were examined in relation to market prices at the time of their signing in accordance with valuations by an external appraiser."

Bottom line, Avisror presented a drop of approximately 75% in quarterly net profit, which stood at approximately 15.7 million shekels. This is mainly due to low gross profitability in the Sde Dov project compared to other projects of the company, which is explained by an unusual recognition of financing expenses.

Avisror ended 2025 with revenues of approximately 423.5 million shekels, a decrease of approximately 37%. Bottom line, the company recorded a decrease of approximately 68% in net profit, which stood at approximately 44 million shekels.