Defense giants targeting Wall Street: Israel explores massive IPOs for Iron Dome and Arrow missile makers

Defense giants targeting Wall Street: Israel explores massive IPOs for Iron Dome and Arrow missile makers​

The Israeli government is reportedly exploring a major strategic pivot, looking to list two of its largest state-owned defence companies in the United States. This initiative aims to unlock significant financial resources while simultaneously granting the firms greater regulatory flexibility regarding sensitive national security programs.

Representatives from Israel Aerospace Industries (IAI) and Rafael Advanced Defense Systems are expected to visit American investment banks and regulators starting in mid-July. These discussions will cover various primary and dual-listing structures, though a final decision has yet to be made by authorities.

Seeking Regulatory Freedom Through US Listings​

The pursuit of a listing in the United States is primarily driven by the need for regulatory accommodation concerning classified defence technology. Companies handling sensitive national security programmes face unique challenges when disclosing information globally.

US regulators are viewed as potentially more flexible than their Israeli counterparts regarding exemptions for classified information. A dual-listing framework, which already exists for companies listed on Nasdaq or NYSE, allows them to continue complying primarily with overseas disclosure requirements.

The delegation is set to meet legal advisers, institutional investors, and relevant government bodies, aiming to fully understand how US securities rules apply to defence technology firms. Beyond the primary listing, there is also consideration of independently listing subsidiaries of both IAI and Rafael abroad.

Massive Stakes and Financial Imperatives​

This overseas divestiture plan is part of a broader strategy involving the sale of minority stakes in both companies, targeting up to 30% for each by the end of the year. The proceeds from these stake sales are expected to inject billions of shekels into government coffers.

The timing is critical given Israel's increased defence spending following the October 2023 attacks. The Bank of Israel projects that this fiscal deficit could widen to 5.3% of GDP this year, making the capital injection necessary for public finances.

Early valuations suggest a potentially massive undertaking; IAI was previously estimated at around 100 billion shekels (approximately $33.7 billion), while Rafael Advanced Defense Systems is assessed to be worth roughly 60 billion shekels.

Broader Governance and Global Demand Surge​

Alongside the share sales, Israeli authorities are also reviewing governance reforms intended to boost the companies' global competitiveness. These considerations include simplifying executive compensation restrictions and streamlining various approval processes.

The market context for both IAI and Rafael is exceptionally strong. Both firms have significantly benefited from a rise in worldwide defence demand. In 2025, IAI reported record revenue, supported by an order backlog that surpasses $30 billion.

Rafael's situation mirrors this trend, with its order backlog crossing the $20 billion mark. Overseas customers are proving vital to both entities; roughly 70% of IAI's business and about half of Rafael’s sales originate internationally.

Paths for Privatization Progress​

The privatization process has seen varying degrees of movement between the two firms. Israel approved a stake sale in IAI several years ago, but the plan stalled due to concerns regarding public disclosure requirements for classified programmes.

Rafael is currently awaiting formal government approval and faces political uncertainty, with potential delays contingent on parliament dissolution ahead of expected elections later this year. However, Rafael has already begun monetizing parts of its portfolio; its maritime security subsidiary DSIT Solutions recently debuted on the Tel Aviv Stock Exchange.