As joint business opportunities between Australia and Israel flourish, Law firms take note – time to consider investing in the land down under
As bilateral trade between Australia and Israel increases with each passing year, and as both countries embrace innovation and technology as key components of future economic growth, numbers show Australia’s market holds a range of new opportunities for Israeli companies. Israeli and international law firms, interested in a piece of this pie, are following close behind.
The value of Australia-Israel bilateral trade in 1970 was $10 million and it has grown tremendously since then, officially valued at $1.2 billion in 2016. The real value of this trade relationship has been estimated at $2 billion, when you consider the significant amount of trade carried out through third parties.
Seven years ago, Audio Pixels became the first Israeli company listed on the Australian Securities Exchange (ASX). Today, 17 Israeli companies have joined the ASX and Israel is now among the top six foreign countries with companies on the ASX.
Consequently, today, almost twice a month, delegations of Australians arrive to Israel for various missions. Cybersecurity, robotics, communications, medical devices and artificial intelligence are among Israeli innovations which attract Australians investors.
Contributing factors to the economic growth between both countries:
Despite the geographical distance, Israel and Australia share several common interests, concerns and values, reflected in the three agreements for bilateral cooperation between both countries in research, development and technological innovation, as well as two active bilateral funding programs.
Historically the relationship between Australia and the Jewish people, and subsequently the State of Israel, has been positive, both politically and militarily.
Four Australian Light Horse brigades and a battalion of camel troops took part in the British conquest of Palestine in 1916-1917. The Australian-Jewish General, John Monash, was a leader of the Australian Zionist movement and Australia was the first country to vote in favor of the establishment of the state of Israel in the UN vote of 1947.
Over 70 years have passed since that historical vote, yet both nations still have a relatively small population. As a result, both nations have their eyes set on financial opportunities abroad.
Furthermore, both countries have considerable areas of arid land, making reliable and adequate water supplies a significant concern.
Israel has consistently been at the forefront of water management and conservation over the last seventy years, developing innovative technologies which benefit arid communities around the world. Israel has the highest crop output per water unit in the world, having learned to use every drop, fulfilling the words of David Ben Gurion, “make the desert bloom”.
Technological innovation has played a key role in the success of the local hi-tech industry over the last few decades. Israeli companies contribute greatly to shaping all aspects of the technological world of tomorrow, from computer chips to popular applications.
Tel Aviv was ranked by Startup Genome’s 2017 Global Startup Ecosystem Report as the sixth best startup ecosystem worldwide, and first among sites located outside of the U.S. Israel ranks first in the world for venture capital raised per capita. The high percentage of capital from foreign investors (85%) indicates the power of the local market.
The growing appetite of Australian investors has tailored a market that is hungry for tech. This is ideal for Israeli start-ups intrigued by the Australian market and who desire to gain access to the funding necessary to become a global player.
Why would an Israeli company choose the ASX over familiar and geographically closer options in Europe and the U.S.?
The ASX happens to be extremely attractive, consistently ranking in the top five exchanges globally for equity raising. ASX offers enormous benefits since companies gain access to a broad investor-base that offers a cost-effective source of capital, as well as the option of follow-on funding.
Whether it be by Reverse Take Over (RTO) or Initial Public Offering (IPO), it is clear that Israeli companies are thriving on the ASX. The average return across the 17 Israeli companies that have listed since 2008 is 184%, and they are approaching a combined market cap of approximately $1.5 billion. One year after listing date, Israeli companies on the ASX have so far enjoyed an average percentage growth in share price of 94%.
What kind of effect has the increase in Israeli-Australian business have on law firms?
With such a thriving startup and investment scene, we can already observe a trend of Israeli law firms expanding business to Australia.
For example, the Israeli law firm Gross, Kleinhendler, Hodak, Halevy, Greenberg, Shenhav & Co. recently hosted a roundtable event focusing on the ASX as a venue for Israeli companies. In addition, several leading Israeli law firms have been marketing their activity in Australia and taking advantage of the increasing trend of Israeli-Australian business, including Agmon & Co., Gornitzky & Co, Barnea & Co, Weiss, Porat & Co., Amit, Pollak, Matalon & Co and more.
Although Australian law firms do not yet maintain a substantial presence in the Israeli legal market (excluding a few representatives, such as Tisher Liner FC Law) we anticipate it is just a matter of time. As business opportunities between both countries continue to develop, Australian law firms, much like their European and American colleagues, will inevitably take interest in the ‘Holy Land’ as well.
To make long story short, it is no secret that expanding your firm overseas is not an easy decision to make. However, law firms who make tough and responsible decisions, while contemplating all impacting factors, will have their work cut out for them Down Under over the decades and years ahead.