Israel Aerospace Industries: Arrow Maker Heads to a ~$20B TASE IPO

THE ENTITIES · OLAM.BUSINESS

Israel Aerospace Industries is the state-owned defense and aerospace prime that builds the Arrow missile defense system, the Heron unmanned aircraft family, the ELTA radar portfolio, and Israel's national satellite program — the second pillar of the Israeli defense industrial base alongside Elbit Systems, and the largest scheduled Israeli industrial IPO of the decade. FY2025 revenue reached $7.3 billion — up 21% year-over-year — with net profit up 45% and an order backlog of $29 billion at year-end (Q1 2026 update: approximately $33B). Company valuation as of January 2026: approximately $20 billion. On January 12, 2026, the Israeli Government Companies Authority confirmed a timetable to float 25–30% of IAI on the Tel Aviv Stock Exchange in Q2 2026 — potentially one of the largest listings in exchange history.

Snapshot

Founded	1953 (as Bedek Aviation Company)
Founding sponsor	Shimon Peres, then director-general of the Ministry of Defense
Headquarters	Lod (Ben Gurion Airport), Israel
CEO	Boaz Levy (since early 2022)
Chairman	Vacant since November 2024; Boaz Levy consensus candidate (April 2026)
Ownership	100% Israeli government (as of July 2026)
IPO timeline	Q2 2026: 25–30% float on TASE, tranches through 2027
January 2026 valuation	~$20 billion
FY2025 revenue	$7.3 billion (up 21% YoY)
FY2025 net profit	Up 45% year-over-year
Order backlog end-2025	$29 billion (~4 years of activity)
Q1 2026 backlog update	~$33 billion
Employees	~16,000 (approximately 50% engineers / masters / PhDs)

From Bedek Aviation to a defense conglomerate

IAI was founded in 1953 as Bedek Aviation — an aircraft maintenance and overhaul operation established with US assistance to service the small Israeli air force. It grew through the 1960s into a manufacturer, building the Fouga Magister trainer under license, then the Nesher (an Israeli-built Mirage 5) and the Kfir in the 1970s after the French arms embargo. The Lavi fighter program — cancelled in 1987 under US pressure — was IAI's, and its cancellation redirected the company toward missiles, drones, radar, and space, the segments where IAI has been globally competitive ever since.

Today IAI employs approximately 16,000 people — roughly half of them engineers with masters or PhDs — reported $7.3 billion in FY2025 sales (up 21% year-over-year, net profit up 45%), and holds an order backlog of $29 billion at year-end 2025, updated to approximately $33 billion in Q1 2026. That backlog is one of the largest in the global defense industry outside the US primes. The company is headquartered in Lod and organized across Military Aircraft (Lahav), Missiles and Space (Malam), Systems Missiles and Space (MBT), ELTA Systems, ELI, Bedek, Ramta, and Maman divisions. Boaz Levy is CEO — in the role since early 2022, having joined IAI as an engineer in the late 1980s and led the Missile and Space Systems Division from 2013. The chairman seat has been vacant since Amir Peretz stepped down in November 2024. In April 2026, Defense Minister Israel Katz and Government Companies Minister David Amsalem converged on Levy as the consensus chairman candidate — potentially collapsing the CEO and chairman roles into the same operator during the IPO transition.

The Arrow franchise

IAI's most strategically consequential product is Arrow — Israel's exo-atmospheric ballistic missile defense system, developed with Boeing under a US-Israel co-development agreement dating to the 1988 Strategic Defense Initiative era. Arrow-2 has been operational since 2000. Arrow-3, the first operational exo-atmospheric missile defense system in the world, entered IDF service in 2017.

Arrow's export moment came in late September 2023 — approximately one week before October 7 — when Germany signed a €3.5 billion (~$3.5B) contract to acquire Arrow-3, the largest single defense contract in Israeli history and the first Arrow export sale. Delivery began in 2025. The German deal was politically contingent on US State Department release, which required the Biden administration's approval — obtained — and it opened Arrow to other European buyers. Discussions with Poland, the Netherlands, and Finland have been reported active. In May 2026, Israel signed a $1 billion follow-on air-defense deal with IAI while preparing for possible renewed conflict with Iran.

Arrow anchors IAI's Systems Missiles and Space division and is the strategic argument for the coming IPO: Arrow is the platform that turns IAI from a defense conglomerate into a globally cited missile-defense prime.

Heron, ELTA, and the space program

Heron unmanned aircraft. The Heron family — Heron 1, Heron TP (Eitan), Heron MK II — is one of the most exported medium-altitude long-endurance unmanned platforms in the world, operational with Germany, India, Australia, Canada, France, Turkey (before the diplomatic break), and others. Heron TP is armed-capable and has been at the center of political fights in Germany over the Bundeswehr's arming decision. India operates the largest Heron fleet outside Israel. IAI also builds the Wind Demon air-to-surface missile, launched in October 2024, extending the missile family into new categories.

ELTA Systems. ELTA is the Israeli national radar and electronic warfare champion, based in Ashdod. The ELM-2084 multi-mission radar is the Iron Dome radar. The ELM-2080 Green Pine is the Arrow radar. The ELW-2085 Conformal Airborne Early Warning System is the CAEW variant flown by the IDF, Italy, Singapore, and Chile. Additional radar products include the ELM-2258 ALPHA (naval) and the ELM-2288 ER (early warning). ELTA is the reason Israeli air-defense radars are the operational reference standard for medium-power AESA systems worldwide.

The space program. IAI builds Israel's Ofek reconnaissance satellite series, the Shavit launch vehicle (the only satellite launcher in the Western Hemisphere that launches west, over the Mediterranean), the Amos communications satellite series (operated by Spacecom), the TecSAR reconnaissance satellite family, and the Beresheet lunar lander that reached the Moon in 2019 — the first privately funded spacecraft to attempt a lunar landing. IAI is Israel's national space company by capability, if not by charter.

The IPO

For over two decades, the IAI IPO was a discussion rather than a plan. That changed on January 12, 2026, when Roi Kahlon, director of the Israeli Government Companies Authority, confirmed the timetable to Reuters: a 25–30% float on the Tel Aviv Stock Exchange targeted for Q2 2026, with additional tranches through 2027 to avoid overwhelming the market. The government will retain a controlling stake of 70–75%.

Company valuation as of January 2026 is estimated at approximately $20 billion — which, if realized at IPO, would make IAI one of the largest listings in TASE history. CEO Boaz Levy has framed the transaction publicly as strategic: the company "needs to grow," and private-market compensation architecture and equity currency are the mechanisms.

The prior obstacles — classified program disclosure, labor-union negotiations, valuation disagreements between the Ministry of Finance and Ministry of Defense — are described as resolvable within the current timeline. Kahlon has pointed to the 2018 Elbit acquisition of IMI as the precedent: IMI is now valued at approximately four times its NIS 1.8 billion (~$571M) purchase price, and the labor and classification questions were solved. Proceeds from the IPO are earmarked for the additional NIS 350 billion, decade-long defense budget expansion announced by Prime Minister Netanyahu.

The three-prime map, now under IPO pressure

Before 2018, Israeli defense sat in a four-way structure with IMI. After Elbit absorbed IMI, the map cleaned to three: Elbit for land warfare, IAI for aerospace and missile defense, Rafael for tactical missiles and air defense. IAI is the aerospace-and-strategic-defense pillar. It does not compete with Elbit on land warfare and does not compete with Rafael on tactical missiles or Iron Dome-class systems.

The Q2 2026 IPO track changes this map again. With both IAI and Rafael scheduled for partial floats on TASE in the same quarter, the state's ownership architecture across all three primes shifts: from full state control at IAI and Rafael to 70–75% state control at both, with public minority stakes at each. Elbit remains privately controlled (though publicly listed on TASE and NASDAQ). The three-prime doctrine of a functioning division of labor stays intact; the ownership structure changes.

The one exception to the division-of-labor rule remains Iron Dome itself, where IAI supplies the radar to Rafael's prime. That co-manufacturing arrangement — Rafael as prime, IAI as radar subcontractor — is the operating model the state prefers: two primes on one strategic system, forced to cooperate.

Why it matters

IAI is the Israeli aerospace-and-strategic-defense position, the operator of Arrow, the exporter of Heron, and the coming IPO that will re-price the Israeli defense industrial base for equity markets. It is the second pillar. It is the one moving from state-only to state-plus-market. And the German Arrow contract — signed approximately one week before October 7, 2023 — is the moment that made the IPO commercially defensible.

בעברית

התעשייה האווירית לישראל. יצרנית התעופה והאווירונאוטיקה הראשית של המדינה. יצרנית סדרת חץ להגנה נגד טילים בליסטיים (חץ 2, חץ 3), טיל ההגנה האווירית ברק-8, משפחת מל״טי הרון, סדרת מכ״מי ELM (כולל מכ״מ כיפת ברזל), סדרת לווייני עמוס, ומערך ההסבה של מטוסי נוסעים למטענים. נוסדה ב-1953 כחברת בדק ביוזמת שמעון פרס, אז מנכ״ל משרד הביטחון. מטה: לוד. הכנסות 2025: 7.3 מיליארד דולר (עלייה של 21%). רווח נקי עלה ב-45%. צבר הזמנות בסוף 2025: 29 מיליארד דולר (עדכון רבעון ראשון 2026: כ-33 מיליארד). הערכת שווי בינואר 2026: כ-20 מיליארד דולר. עובדים: כ-16,000, כמחצית מהם בעלי תארי הנדסה או תארי מאסטר ודוקטורט. מנכ״ל: בעז לוי (מתחילת 2022). מקום היו״ר פנוי מאז נובמבר 2024. ב-12 בינואר 2026 אישרה רשות החברות הממשלתיות לוח זמנים להנפקת 25%-30% מהחברה בבורסה בתל אביב ברבעון השני של 2026, עם נתחים נוספים עד 2027.