Israel plans to offload stakes in top weapons firms to raise cash amid rocketing defence costs from two years of war, senior officials say.
Finance ministry accountant general Yali Rothenberg tells the FT that privatisation kicks off with Israel Aerospace Industries, maker of Arrow defence, missiles, and drones.
Targeting Key Players
Rafael Advanced Defense Systems – builder of Iron Dome and David’s Sling – is next under review.
“Extra defence needs” spur partial sell-offs of defence assets, Rothenberg says.
Former military financial adviser Gil Pinchas agrees Rafael poses trickier hurdles.
Direct war costs from Hamas’s October 7, 2023 attack tally $62 billion, excluding economic fallout.
Budget Surge
Defence ate 8.3% of GDP in 2024 – double prior levels – across Gaza, Lebanon, Syria, Iran fronts.
US aid topped $21.7 billion; budgets now ease to 5% GDP or $35 billion medium-term.
Growth slowed, deficit hit 6.8% GDP.
Sale Details
Government eyes 25% IAI stake, up to 49% max.
Pinchas pegs initial float at 20-25%, within 1-2 years.
IAI’s $30 billion order book, $6.1 billion 2024 sales, $493 million profit signal scale.
Rafael sales jumped 25% to $4.8 billion, profit 64% to $257 million.
Broader Moves
Record $14.8 billion arms exports persisted despite Gaza war criticism.
Proceeds reinvest in firms and state coffers; defence ministry eyes base relocations like Tel Aviv’s Kirya to cheaper spots for land sales.
Talks aim to offset long-term fiscal strains.
