FARNBOROUGH — The CEO of Israeli giant Rafael is “very optimistic” than the government-controlled firm may be ready to go private before the end of the year, a move he described as vital for the future of the company.
In a sit down with Breaking Defense during last week’s Farnborough Airshow, Yoav Tourgeman said his company has seen 30 percent growth year over year, but that to keep that going, Rafael needs a “more flexible set of rules” about how it can invest than the Israeli government allows.
“If I decide to buy a company, [as a private firm] it’s my decision, I will do it a week later,” he said. “If you do it through the government, you have to get to the government to get the approval,” which comes with a different set of requirements. “So it slows down the processes.”
Competitor Israeli Aerospace Industries (IAI) is also moving towards the IPO. Tourgeman said it would be “better” if the two companies can align moving to the stock market together but acknowledged that may not happen logistically.
He noted that while IAI has been eyeing an IPO for longer than Rafael and so is more prepared, the two have different relationships with their workforce unions. IAI’s is more politically active, he said, which may cause the company to move more slowly than Rafael, whose union is more focused on workforce issues.
“I do believe that in our case, both management and employees can move fast, but we [must] still hold back until the government will take decisions,” he said. “As you know, the Knesset [parliament] has decided to dismantle itself, and Oct. 27th there is going to be election. I do believe that quite immediately after that, the decision-making process will restart.”
Asked if it is possible that the deal happens before the end of 2026, Tourgeman smiled and said, “I am very optimistic.”
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Questions still remain about how the Knesset will decide to move forward, however. One of them: whether the companies will be listed on the US stock market or elsewhere and what percentage of the companies the government will maintain.
The government will “say what is the privatization depth. Will it be majority or not? What will be the constraints? Is it NASDAQ, the Israeli stock market, or other way around? I don’t know,” Tourgeman said. “This is up to the leadership to take [that] decision. My preference is to have as little burden from regulation as possible, because, you know, we are an international active, very competitive company, and what we need is flexibility.”
Still, while the IPO push is clearly something Tourgeman hopes happens, he made a point several times during the discussion that Israel’s security remains top of mind.
“I, for sure, would not like to jeopardize any of the points regarding the safety of Israel, the security of Israel,” he said. “So, this is our number one priority, and that being said, we would like to find the best way to be as flexible as possible.”
Volkswagon Team Up?
In May, reports remerged that Rafael was in talks with Volkswagen to convert a production site in Germany and have it make parts for the Rafael-made Iron Dome interceptor. Since then, Bloomberg reported that Qatar’s financial backing of VW scuttled the deal, though that development has since been denied in other outlets. The most recent update is that the German government was reportedly working on a solution to support Israeli participation.
During the interview, Tourgeman declined to specifically address the potential VW deal. However, asked more broadly about Rafael’s interest in teaming with auto manufacturers to increase production capacity, he said the firm is always looking for a “win-win situation” with partnerships.
“When we are talking about affordable mass, car manufacturers have a lot of skills that can contribute to the process. Now, there is a kind of recession in car industries. So from both sides there is interest, and a very good technological basis to collaborate,” he said. “So this is, in principle, the idea behind collaboration with automakers, not necessarily only in Germany.”
He noted Germany, India, the US and the UK as candidates for this kind of team up in the future, and said he is “looking to expand our activities” in those countries broadly. That includes potentially an energetics presence in Europe.
‘Will Not Bend’ To French Pressure
Like other Israeli firms, Rafael has had run-ins with the French government during exhibitions in Paris over the last two years. That included last year’s Paris Airshow, where firms set up their booths over the weekend, only to walk in on Monday and find large black walls erected around their areas. A similar scene played out during Eurosatory last month.
Asked whether Rafael planned to attend next year’s Paris Airshow, the executive was direct: The company will not shift its plans to exhibit its wares.
“For sure, we will not bend to the French government laws,” Tourgeman said, becoming animated on the subject. “Our intentions, our interests, [are] we’re going to be there. We’re going to show what we can bring to the table, and I hope that they will not try to intervene as a democratic so-called, country.”
“We are going to try again,” he added. “Even if we will have to go to the Supreme Court. We will do that. Eventually, eventually — there are international laws, and they have to obey international laws.”