Why Israel’s $50 Billion Defense IPO Is Headed to Wall Street, Not Tel Aviv

Israel plans to list two of its largest state-owned defence companies in the US, partly because officials believe American regulators will grant more leeway on classified programme disclosures than their Israeli counterparts. A government delegation travels to the US in mid-July to assess IPO options for Israel Aerospace Industries (IAI) and Rafael Advanced Defense Systems, the makers of the Arrow and Iron Dome anti-missile systems. Officials familiar with the trip say the US market offers something the local one does not: flexibility on national security secrets. A Disclosure Problem, Not Just a Capital Problem The Israeli government wants to sell stakes of up to 30% in both companies and close a deal before year-end. IAI carries a current valuation of roughly $33.7 billion. Rafael sits at around $20 billion, according to Bloomberg. IAIs privatization won government approval six years ago but stalled over concerns about what a listed company must disclose. Both firms run classified defense programmes, and Israeli regulators have shown little appetite for exemptions on national security grounds. According to an Israeli official familiar with the trip, US regulators are more likely to accommodate those concerns. A Nasdaq or New York Stock Exchange listing could also unlock Israels dual-listing arrangement, letting both firms trade on the Tel Aviv Stock Exchange under overseas rules. "US regulators are seen as more likely to grant companies leeway on disclosure obligations on national security grounds than Israeli counterparts, according to the official." The delegation will meet investors, underwriters, and lawyers to map out how US securities law applies to companies running sensitive government contracts. Officials also plan to examine whether IAI and Rafael subsidiaries could list separately, bypassing the government approval requirements that apply to the parent companies. Timing Adds Pressure The US regulatory backdrop has shifted. The 2026 IPO landscape has grown more complex, and a law that took effect in March 2026 now requires directors and officers of foreign private issuers to publicly disclose equity holdings and transactions in real time, a significant change from prior practice that raises the stakes for any overseas listing. Israel is betting that negotiated national security exemptions can offset those new obligations. But no final decision on timing or venue exists. Rafael faces a hard deadline too; the company needs government sign-off before parliament dissolves ahead of elections due by late October. Both companies posted record results in 2025. IAI reported $7.4 billion in sales and a $712 million net profit, with its order backlog topping $30 billion for the first time. Rafaels backlog crossed $20 billion. Whether Wall Street and Washington will grant the disclosure carve-outs Israel needs remains an open question.