Defense IT co TSG raises NIS 62m in TASE IPO

TSG Group, which makes advanced IT systems for the defense industry, raised NIS 62 million in an initial public offering on the Tel Aviv Stock Exchange (TASE) at a valuation of NIS 462 million, post-money. TSG is equally owned by Israel Aerospace Industries and Formula Systems (TASE: FORTY) and is run by CEO Arik Kelman. The IPO was led by Omri Levi’s Active Underwriting.

70% of TSG’s revenue from advanced IT management systems software is produced for the defense market. TSG’s software serves the IDF and other security forces.

20% revenue growth in 2023

In 2022 and 2023, TSG completed two major acquisitions of EPR Systems (60%) and Bar Technologies (100%), expanding the company’s activities into the commercial market. Both acquired companies operate with Israel’s 160 local authorities.

In 2023, the company reported revenues of NIS 295 million, up 20% from 2022. Most of the revenue growth was organic, and according to management, was in the area of ​​command, control and intelligence activities. Acquired companies contributed to the increase in revenues. The company reported a net profit of NIS 12.6 million in 2023, compared to a net loss of NIS 9 million in 2022, mainly due to the recognition of credit losses related to the activities of one of the company’s clients. Prior to the IPO, TSG was rated by S&P at A, with a stable outlook.

TSG recently made another acquisition, when it signed an agreement to purchase ARTS, which designs, develops and manufactures electronic systems and embedded computer services. TSG is paying NIS 12 million upfront and up to an additional NIS 10 million in installments until 2027. ARTS was founded in 1998 and operates in the field of hardware and software integration for electronic systems and complex control systems. In 2023, ARTS recorded revenues of NIS 14 million.

“TSG’s IPO is a milestone in the company’s development, strengthening its leading position in its areas of activity and achieving its growth plans in the coming years, while leveraging TSG’s unique capabilities, both in the defense market and in the civilian market,” said Kelman.

This article was published in Globes, Israeli Business News – en.globes.co.il – on July 31, 2024.

© Copyright Globes Publisher Itonut (1983) Ltd., 2024.