Aug. 04--The Wall Street offering of road accident avoidance technology developer Mobileye(NYSE: MBLY), which raised $1.023 billion a record IPO for an Israeli company -- has created many millionaires. After Colmobil controlling shareholder Shmuel Harlap, Mobileye's two cofounders, chairman and CTO Prof. Amnon Shashua (54) and president and CEO Ziv Aviram (55) are the biggest private shareholders in the company.
Each of them sold shares for about $46 million in the IPO, while retaining a holding worth about $640 million, making a total equity of almost $690 million (gross, before taxes), or NIS 2.3 billion. This could explain why the two men smiled so much at the camera when they opened trading on the New York Stock Exchange (NYSE) last Friday. Shashua is the technological brain behind the company. He met Aviram, former CEO at Keter Publishing House Ltd. (TASE: KETR) and Gali, when the latter was advising him about CogniTens, Shashua's first startup, which failed, in contrast to Mobileye, and was sold for $20 million -- less than the capital invested in it. While creating Mobileye, the two men also founded another company, OrCam which is still alive and kicking. OrCam developed reading glasses for shortsighted people.
The gigantic offer to sell, which was to have amounted to $681.6 million, is quite a bonanza for the Israel Tax Authority. Excluding the shares sold by foreign parties at interest (and assuming that the Israeli shareholders did not use tax planning to avoid paying taxes in Israel), taxes paid in Israel will amount to NIS 300-400 million (based on a 25% capital gains tax).
Incidentally, and this is an important point, the company holding the IPO is incorporated in the Netherlands (Mobileye NV). Already in 2003, under the tax convention between Israel and the Netherlands, its tax liability was in Israel, not the Netherlands. Still, the company's subsidiary incorporated in Israel benefits from the Law for the Encouragement of Capital Investment. As a result, last year, the Dutch company, the one that held the IPO, obtained a $2.3 million tax benefit, while paying $334,000 in tax in the preceding year.
Harlap (69) has always been one of Israel's wealthiest people. Colmobil, which has been the leading vehicle importer in Israel in recent years (importing Mercedes-Benz, Mitsubishi, Hyundai, and Smart cars) generated at least NIS 1 billion in capital for him and his family, but this is probably small change next to his share in Mobileye.
Harlap believed in Mobileye almost from the beginning, and began investing in the company almost a decade ago. Through Colmobil and also personally, he invested a few tens of millions of dollars in the company and reached a 9.1% holding (after the IPO), 1.1% more than each of the cofounders. His belief has apparently not ebbed; he is the only Israel shareholder who did not sell shares as part of the IPO. On paper, his holding is worth $715.3 million, NIS 2.4 billion, making him one of the world's few Israeli billionaires (in dollars).
Additional return for Psagot provident fund members
In addition to venture capital funds, the list of Mobileye shareholders includes almost every type of investor: US financial investors (like Goldman Sachs and the Fidelity Fund), US non-financial investors (such as the Enterprise Holdings vehicle leasing company), private Israeli investors (a long list), Israeli financial investors (such as Leumi Partners Ltd.), and even Israeli investment institutions (Psagot). The largest Israeli financial investor in the company is Leumi Partners, the investment arm of the Leumi group, led by Yaron Bloch, which sold shares for $36.3 million, while retaining a holding worth $98.9 million -- a total of $135.2 million (NIS 500 million). Members of the Psagot provident fund will also benefit from this offering. Through the funds of its members, Psagot sold shares for $22.5 million, while retaining a holding worth $61.5 million -- a total of $84 million (NIS 286 million). Migdal Insurance and Financial Holdings Ltd. (TASE: MGDL) accumulated a holding worth $67.2 million, while Clal Insurance Enterprises Holdings Ltd. (TASE: CLIS) accumulated $50.8 million. Delek Automotive Systems (TASE: DLEA), which held 4.7 million shares in Mobileye (2.4%) after the share split on the eve of the IPO, reported today that it had sold 36% of its holding in the company and would post a gain of some NIS 250 million in its second quarter financial statements, while Suny Electronics Ltd. (TASE: SUNY) had a 0.2% holding.