The company that built Iron Dome has never published a full set of audited financial statements for public investors. That is about to change. Rafael Advanced Defense Systems, wholly owned by the State of Israel, is now preparing an initial public offering. Recent Israeli reporting values the Rafael IPO above $20 billion, and the chief executive of the Iron Dome maker says the deal could price before December.

“I am very optimistic,” CEO Yoav Turgeman told Breaking Defense when asked whether the offering closes in 2026. He has reason to be. Rafael has grown about 30 percent year over year, its order backlog has climbed past $20 billion, and the systems it makes just spent a war being validated in front of every defense ministry on earth.

That last point is the one investors keep coming back to. Israel’s air defense architecture performed under sustained missile attack, and the Government Companies Authority is moving to sell equity while the world is watching. Whether Jerusalem can run an Israel defense IPO of this size without exposing classified work is the open question.

What the Rafael IPO Would Actually Sell

The state plans to float between 25 and 30 percent of Rafael, and a similar slice of Israel Aerospace Industries, in a series of small tranches spread across 2026 and 2027. The Israel Aerospace Industries IPO leads the sequence, and the Rafael IPO follows behind it. Israel retains control. Nobody is selling the crown jewels.

“If you want to maximize valuation of the sale, we must make it in steps,” said Roi Kahlon, director of the Government Companies Authority, in comments to Reuters. “We have an opportunity now, because of the high value of both companies.”

Tranching matters more than it sounds. A single large offering into a market that has never priced an Israeli state defense asset would invite a discount. Selling in blocks lets the first tranche set a reference price and the later ones capture whatever multiple expansion follows. It is the same staircase European governments walked when they privatized their national champions in the 1990s.

Initial reporting valued Rafael near $10 billion. More recent figures put the company above $20 billion. That gap is the entire story of the past eighteen months in Israeli defense.

Why Rafael Is Worth Twice the Government’s First Estimate

Turgeman laid out the case himself in an interview with Calcalist. “The world saw Rafael’s systems perform in the 12-day war with Iran,” he said. “Many countries want weapons with proven battlefield performance.”

Then the line that stopped people: “Not a single order has been canceled.”

That was said against a backdrop of European governments issuing embargo statements. Germany’s chancellor announced restrictions on Israeli arms. Weeks later, the German Air Force signed a deal worth more than 350 million euros for Rafael’s Litening 5 targeting and guidance pods, to be fitted to Typhoon fighters. Rhetoric went one way. Procurement went the other.

Rafael’s own numbers back the story up. Quarterly sales rose 20.4 percent to 4.7 billion shekels, roughly $1.41 billion. First-half net profit jumped 68 percent to 612 million shekels, about $184 million. Quarterly net profit hit 340 million shekels against 132 million a year earlier, a 2.5x increase. The company hired 2,000 people in one year, added another 800 in six months, and raised research spending 30 percent.

About half of Rafael’s sales go to the IDF. The other half goes abroad, and that share is the one growing.

How Big Is Israel’s Defense Industry Now

Three companies dominate: Rafael, IAI, and the already-public Elbit Systems. Together they accounted for roughly 90 percent of Israel’s record $19.2 billion in defense exports in 2025, and they hold a combined order backlog near $90 billion.

Break that down:

  • Elbit Systems: record $30.2 billion backlog as of March 31, the first time it crossed $30 billion. About 71 percent comes from customers outside Israel.
  • Israel Aerospace Industries: $29 billion at the end of 2025, up from $25 billion a year earlier.
  • Rafael: roughly $22 billion, and closing on Elbit.

Elbit’s European sales alone topped $500 million in the first quarter, or 23.4 percent of revenue, and in May the company announced a $1.4 billion contract with an unnamed European customer covering autonomous systems, electronic warfare, precision munitions and software-defined radios. Europe is rearming. Israel is one of the few suppliers with inventory and combat data.

What Rafael Makes That Nobody Else Does

Iron Dome is the famous one. It is not the interesting one anymore.

David’s Sling handles the medium tier. Iron Beam, the high-power laser interceptor now being adapted for airborne platforms by Elbit, was delivered to the IDF at the end of 2025 and changes the economics of air defense completely: a laser shot costs a few dollars against an interceptor missile costing tens of thousands. Against saturation drone attacks, that ratio is the difference between a sustainable defense and bankruptcy by attrition. Our analysis of Golden Dome and Israeli air defense costs found Israeli interceptors running 19 to 97 percent cheaper than comparable American systems.

Then there is SkySonic, Rafael’s hypersonic interceptor program. Turgeman described it as “at the peak of its development” with core capabilities already achieved. “We currently know how to counter all existing threats in the arena,” he said, adding that acceleration depends on budget allocation from the defense establishment.

Iran has declared hypersonic ambitions. China is fielding a growing portfolio. An interceptor that works against Mach 5-plus targets is, at the moment, a product with essentially no competition and a very motivated customer base. Switzerland has already opened talks over Arrow and David’s Sling.

The Classified Problem Nobody Has Solved

Here is the hard part. A significant share of Rafael’s work is classified, and classified work cannot easily be described in a prospectus. Any Rafael IPO filing has to survive that review before a single share trades. Until recently, the company could not even complete a formal valuation for that reason.

IAI is further along. It already has bonds trading on the Tel Aviv Stock Exchange and publishes financial statements, so the disclosure machinery exists. Rafael has never gone through the process at all.

Chairman Yuval Steinitz has argued that mechanisms can protect classified operations while still allowing a listing, and Turgeman agrees. “Just as classified issues were overcome in IAI’s IPO, with a little more effort the same can be done for Rafael,” he said. “Other large defense companies worldwide are publicly traded and keep their secrets.”

He is right that Lockheed, Raytheon and BAE all manage the same tension. He is also describing a country where the classified fraction of the business is proportionally far larger.

The Case Against the Rafael IPO

Not everyone in Jerusalem wants this. Turgeman acknowledged as much: “Many in Israel support Rafael’s IPO, though some oppose it, and we are holding discussions with them.”

Their objections are serious. Public shareholders create quarterly pressure on a company whose most important products may take a decade to develop and may never be commercially sold. Foreign investors in a national security asset raise questions no Israeli government has fully answered. Union resistance is real, particularly at IAI, where labor is more politically organized. And an unresolved argument continues over whether the listing belongs in Tel Aviv or New York, where the capital pool is deeper and the disclosure regime stricter.

Turgeman himself drew the line clearly. He supports the IPO, he said, but he would not do anything to jeopardize the safety and security of Israel. That is not boilerplate. A CEO is signaling that if disclosure requirements go too far, the deal stops.

A financial counterargument exists too. Rafael’s backlog is inflated by wartime procurement and by the $5.2 billion American assistance package that funds David’s Sling and Iron Dome interceptors for the IDF. Backlog built on emergency supplementals is not the same as backlog built on baseline budgets. An investor buying at a wartime multiple is betting that global demand for Israeli air defense stays elevated after the shooting stops. Our coverage of the $37 billion cost of the Iran campaign shows how quickly those emergency lines were written.

What Turgeman Says the Rafael IPO Actually Fixes

Money is not the point. Rafael is profitable and already has more orders than it can fill.

“I am in favor of Rafael’s IPO because it operates in a competitive, dynamic, and fast-paced market, while government companies by nature are subject to state regulation, which burdens them,” Turgeman said. “The IPO will be good for Rafael and good for the state.”

Translated: state ownership means Rafael cannot acquire companies, cannot move on partnerships quickly, and cannot invest with the flexibility its competitors have. Elbit, a private company, has been buying its way into European markets for years. Rafael has to ask permission.

Kahlon points to precedent. Israel Military Industries was sold to Elbit in 2018 and is now worth roughly four times its purchase price. The state, in that case, sold too cheap and too early. The tranche structure for Rafael and IAI is designed so that does not happen twice.

IAI CEO Boaz Levy put the growth case simply: “We should look toward the future. It’s very important for the company because IAI needs to grow.”

Labor Agreements, Clearance Rules and the Venue Fight

Three things determine whether the Rafael IPO happens on Turgeman’s timeline.

First, the labor agreements. Kahlon expects regulatory and union hurdles to be resolved in the coming months. IAI’s workers committee is the harder negotiation and IAI is the lead offering, so a delay there delays everything.

Second, the security clearance framework. Somebody has to write the rules that let a classified defense manufacturer file a prospectus. That document does not exist yet.

Third, the venue. Tel Aviv is the stated plan, and Calcalist has reported that New York remains under discussion for at least part of the float. A US listing would widen the investor base considerably and complicate the disclosure question just as much.

What is the Rafael IPO valuation?

Early government estimates put Rafael near $10 billion, but more recent reporting values the company at more than $20 billion as its order backlog climbed past $22 billion. The state plans to sell 25 to 30 percent in tranches, which means the initial float would raise somewhere between $5 billion and $6 billion at the higher valuation.

Will Rafael list on the Tel Aviv Stock Exchange or in New York?

The current government plan calls for a Tel Aviv Stock Exchange listing, matching IAI, which already has bonds trading there. Israeli business press has reported that a US venue remains under discussion because it offers a deeper capital pool. No final decision has been announced, and the choice affects both the valuation and the disclosure burden.

Does Rafael make Iron Dome?

Yes. Rafael Advanced Defense Systems developed Iron Dome, David’s Sling and the Iron Beam laser interceptor, which was delivered to the IDF at the end of 2025. Rafael also produces the Spike anti-tank missile family and Litening targeting pods, and is developing SkySonic, an interceptor designed to defeat hypersonic missiles.

How large is Israel's defense export market?

Israel recorded $19.2 billion in defense exports in 2025, an all-time high. Rafael, IAI and Elbit Systems accounted for roughly 90 percent of that total and hold a combined order backlog near $90 billion. European buyers have driven much of the recent growth, with Elbit alone booking a $1.4 billion European contract in May.

Can a classified defense company legally go public?

Yes, and several already have. Lockheed Martin, Raytheon and BAE Systems all run large classified programs while trading publicly, using segment-level reporting that discloses financial results without describing the underlying work. Rafael’s challenge is proportional rather than legal: a much larger share of its business is classified, so the disclosure framework has to be built specifically for it.

What is SkySonic?

SkySonic is Rafael’s interceptor program aimed at defeating hypersonic missiles, which travel at five times the speed of sound or faster and can maneuver in ways that defeat conventional interceptors. Turgeman has said the program is at the peak of its development with core capabilities achieved, and that accelerating it depends on funding decisions by Israel’s defense establishment.