Tel Aviv Stock Exchange Seeks Global Partners for Profitable Index Business Amid Regional Tensions
Tel Aviv Stock Exchange Eyes Global Alliances Amid Regional Turbulence
War-Tested Exchange Seeks Strategic Partner for Crown Jewel Index Business
The Tel Aviv Stock Exchange announced today that its Board of Directors has authorized management to explore strategic options for its lucrative index business, including potential partnerships with international index operators.
The announcement, which came just hours after markets closed on June 18, represents a watershed moment for Israel's primary capital market. TASE has appointed global investment bank Jefferies to advise on options ranging from a partial or full sale to a joint venture with leading international index providers.
"The exchange's activity has not been interrupted by the conflict," noted TASE CEO Ittai Ben-Zeev in documentation related to the announcement, emphasizing the market's resilience even as Israel navigates heightened tensions with Iran.
| Category | Details |
|---|---|
| Initiative | TASE exploring partial/full sale, joint venture, or collaboration for its index business. |
| Board Authorization | Approved on June 18, 2025, to review strategic options. |
| Advisor | Jefferies appointed to evaluate partners. |
| Strategic Goals | Increase global exposure of Israeli companies and attract foreign investors. |
| Market Resilience | TASE remains operational despite regional conflict; leadership emphasizes stability. |
| Reforms | Includes shift to Monday–Friday trading week by 2026. |
| Geopolitical Context | Announced amid Israel-Iran tensions but no operational disruptions. |
| CEO Statement | Ittai Ben-Zeev highlights TASE’s resilience and need for global engagement. |
| Recent Performance | Strong trading volumes, revenues, and investor confidence despite conflict. |
| Debates | Proponents: Globalization necessary for growth. Critics: Risks losing local control. |
Beyond Missiles: The Hidden Value in TASE's Digital Crown
At the core of this strategic review lies a remarkably profitable segment within TASE's operations. The index-licensing business generated approximately NIS 25.1 million (US $6.8 million) in revenue during 2024, representing a staggering 146% year-over-year increase following fee adjustments implemented last January.
While modest in absolute terms—accounting for roughly 28% of TASE's data and connectivity revenue—the index business commands premium margins estimated between 60-65%, significantly outperforming the exchange's overall 42.6% adjusted EBITDA margin.
Market analysts characterize the potential deal as "financially modest but strategically pivotal," with valuations potentially reaching US $90-110 million in a full sale scenario—approximately 7% of TASE's current US $1.6 billion market capitalization.
The Timing Puzzle: Why Now?
The strategic review comes at a fascinating inflection point for the Israeli exchange. Despite the ongoing regional conflict that might typically deter international investment, TASE recorded a banner year in 2024 with record revenues of NIS 438 million, up 12% year-over-year.
Multiple factors appear to be driving the timing of this move:
Demonstrated Pricing Power
TASE successfully implemented significant index-licensing fee increases in 2023-2024, revealing unexpected elasticity in its pricing model—evidence that its indices carry substantial value for institutional investors and fund managers.
War-Proven Operational Resilience
The exchange has maintained continuous operations despite several rounds of missile attacks, most recently in October 2023 and June 2025, demonstrating robust remote-trading protocols that enhance its credibility with potential international partners.
Regulatory Momentum
The move follows other significant structural reforms, including TASE's demutualization and the recently announced shift to a Monday-Friday trading week starting in early 2026—changes that align the exchange more closely with global markets.
Global Suitors Circle Unique Asset
Several major global index providers are considered potential partners for TASE, each bringing different strategic advantages:
MSCI could reinforce its Emerging Markets "Israel" suite, though would need to navigate the ongoing debate about Israel's market classification. FTSE Russell (London Stock Exchange Group) offers deep passive distribution capabilities but might face regulatory scrutiny given its existing Israel indices.
S&P Dow Jones Indices presents an intriguing possibility, with its joint venture structure between S&P Global and CME Group potentially offering a blueprint for TASE's approach. The partnership could theoretically pipe TA-35 futures to CME's global platform.
Deutsche Börse's Qontigo/Stoxx division might view TASE as an entry point into MENA markets, while exchange operators Nasdaq and ICE could be interested in adding data annuities to their derivatives-focused businesses.
The JV Sweet Spot: Monetizing Without Surrendering Control
While the board is exploring multiple options, market observers suggest a minority joint venture represents the most likely outcome, mirroring successful precedents like S&P Dow Jones Indices.
"A structured JV that sells 40-49% of TASE Indices at approximately 25× stand-alone EBITDA represents the sweet spot," suggested one market analyst familiar with exchange valuations, who requested anonymity due to the sensitivity of ongoing discussions.
Such a structure would deliver upfront cash of approximately US $55 million while preserving TASE's control over index methodology—a critical consideration given the national importance of the exchange's benchmarks.
A full sale, while potentially maximizing immediate financial returns, faces significant hurdles. The exchange's indices represent a "national crown jewel," and surrendering complete control could prove politically unpalatable, particularly during wartime.
Investment Horizon: Navigating the Opportunity
For investors, the strategic review creates several potential opportunities and risks. The announcement alone could drive a narrative shift, potentially unlocking a revaluation of TASE shares closer to the premium multiples commanded by data and index providers (20× EV/EBITDA or higher) compared to TASE's current 10× multiple.
A successful partnership with a major global index provider could significantly enhance the visibility and accessibility of Israeli equities to international investors, potentially addressing the "conflict premium" that has kept many global portfolio managers underweight Israel.
For ETF issuers and users of TASE indices, the review signals potential changes ahead. License fees will likely increase following any partnership, with budget increases of 5-10 basis points possible for 2026 renewals. However, improved liquidity and tighter spreads could offset these costs for active traders.
The primary risk remains geopolitical escalation that could trigger prolonged trading suspensions, though TASE's remote protocols have proven remarkably durable through recent conflicts. Regulatory concerns about foreign control of a critical market infrastructure represent another potential obstacle, though a minority partnership structure with appropriate governance safeguards could address these issues.
Israel's Market Gateway: Balancing Global Ambition and National Interest
As Israel's economy continues to demonstrate resilience amid regional challenges, TASE's strategic review represents a calculated step toward greater integration with global financial markets.
The most balanced outcome—what one analyst termed "monetize, but don't orphan"—would leverage international distribution capabilities while preserving local control over this essential piece of market infrastructure.
For investors in TASE shares, the strategic review process itself could catalyze a revaluation independent of the ultimate transaction structure. Market analysts suggest potential upside of up to 20% in TASE's share price over the next 12 months, contingent on execution and a contained geopolitical environment.
As with any investment thesis, past performance does not guarantee future results. Investors should consult financial advisors familiar with their individual circumstances before making allocation decisions based on this developing situation.