Rafael Advanced Defense Systems wants off the leash. The state-owned Israeli maker of Iron Dome, David’s Sling and the Iron Beam laser interceptor is growing 30 percent a year and sitting on a $23 billion order backlog. CEO Yoav Tourgeman says a Rafael IPO could be done by December.
He told Breaking Defense at the Farnborough Airshow this week that he is “very optimistic” Rafael can complete an initial public offering before the end of 2026. A Rafael IPO on that timeline would be the largest defense listing in Israeli history. And it would rank among the strangest public offerings anywhere, because a meaningful share of what Rafael builds is classified. Investors would be buying a company whose most important products cannot be described in a prospectus.
Backlog is the number underwriters will lead with. Rafael closed 2025 at a record NIS 74.4 billion, roughly $23 billion, according to the company’s annual report covered by Globes. One year earlier the figure was far smaller. The war changed the order book.
Why Rafael Wants Out of Government Ownership
The argument Tourgeman keeps making for a Rafael IPO has nothing to do with raising cash. Rafael is not short of cash. It is short of speed.
“The IPO will not only be good, but it is a real necessity,” Tourgeman told Globes in March. “It will allow us the agility and flexibility that are required in the market, and as a government company, despite all the goodwill and flexibility, do not exist.”
Every acquisition runs through the Government Companies Authority. So does every capital allocation decision. So does every out-of-band pay package for an engineer Rafael wants to keep away from Elbit or a Tel Aviv startup. European ministries are now signing defense contracts in months rather than years, and against that clock the approval lag is expensive. Tourgeman has asked for a “more flexible set of rules” on how Rafael can invest. The fastest route to those rules runs through the stock exchange.
A year ago he put it in blunter terms: “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. The IPO will be good for Rafael and good for the state.”
The Numbers Behind the Rafael IPO
Rafael’s 2025 results give underwriters something to work with, and they are the numbers any Rafael IPO prospectus would open with.
- Revenue of NIS 21.7 billion, about $6.94 billion, up 21.5 percent from 2024
- Net profit of NIS 1.35 billion, up 42 percent year over year
- Record order backlog of NIS 74.4 billion, roughly $23 billion
- Foreign customers accounted for 46 percent of full-year sales
- About 2,000 new employees hired in 2025, on top of a base of roughly 10,000
- R&D spending at approximately 8 percent of revenue
Q2 2025 was the inflection point. Sales hit NIS 4.7 billion, up 20.4 percent, and net profit reached NIS 340 million against NIS 132 million a year earlier. “Our net profit increased 2.5 times year-on-year in the quarter,” Tourgeman said at the time. “Rafael is growing rapidly, even compared to other defense companies. Just days after closing our Q2 numbers, we already received new orders worth more than NIS 5 billion.”
Growth has since accelerated to the 30 percent figure Tourgeman cited at Farnborough. Elbit Systems, Israel’s largest publicly traded defense contractor, reported a backlog of $23.8 billion after a 43 percent jump since October 2023. Rafael is now within striking distance of a rival that has had public-market capital and public-market compensation tools for decades.
Here is how Israel’s three defense majors line up as the Rafael IPO question moves toward the Knesset.
| Company | Ownership | Order backlog | Listing status |
|---|---|---|---|
| Rafael | State-owned | NIS 74.4 billion, about $23 billion | IPO targeted by end of 2026 |
| Elbit Systems | Publicly traded | $23.8 billion | Listed on Nasdaq and TASE as ESLT |
| Israel Aerospace Industries | State-owned | Not disclosed here | 30 percent sale discussed at a NIS 100 billion valuation |
What Battlefield Performance Did for the Order Book
The commercial case underneath the Rafael IPO rests on something competitors cannot buy: proof.
“The world saw Rafael’s systems perform in the 12-day war with Iran,” Tourgeman said. “Many countries want weapons with proven battlefield performance. Without the uproar, sales would have been even stronger. Not a single order has been canceled.”
That last clause carries the weight. German Chancellor Friedrich Merz announced an arms embargo on Israel, and through that entire stretch Rafael’s order rate ran ahead of the prior year. Germany itself then signed a deal worth more than 350 million euros for Litening 5 targeting and guidance pods to be fitted to Luftwaffe Typhoons. The contract landed days after the embargo talk. Procurement officers responsible for keeping their own cities intact made a different calculation than their foreign ministries did.
Meanwhile the international footprint keeps widening. Rafael and Raytheon opened a launcher plant in Arkansas. Rafael and Kratos Defense launched Prometheus Energetics with $175 million to build rocket motors in the United States. Trophy, the active protection system, went to the German army on Leopard tanks and is being integrated into South Korea’s K2 under an agreement with Hyundai Rotem. Georgia received Spyder. Not every deal clears, as the blocked Volkswagen-linked Iron Dome sale to Qatar showed. Romania signed what became Israel’s largest single defense export deal.
A Sector Repricing Around Three Listed Firms
Israel’s defense exports hit a record $19.2 billion in 2025, and the broader defense-tech boom has been one of the few reliable growth stories in a volatile market. A Rafael IPO would leave the sector with three large listed companies rather than one, and that changes the sector’s cost of capital. It would also change what these firms can pay engineers, against a domestic tech sector that has been draining defense talent for years. Buying foreign subsidiaries gets easier when the currency is stock.
Global investors would gain something they currently lack: a direct instrument for exposure to a segment that has outperformed nearly everything else since 2023. Elbit is the only pure-play available today.
Tourgeman also signaled a return to French defense exhibitions, a small note with real meaning after Israeli firms were partially excluded from Eurosatory and the Paris Air Show. Companies that get pushed out of trade halls but keep winning contracts tend to get invited back.
The Race With Israel Aerospace Industries
Rafael is not the only state-owned Israeli defense company headed for the exchange. The Government Companies Authority has been pushing an offering of 30 percent of Israel Aerospace Industries at a valuation near NIS 100 billion. IAI has been preparing longer.
Tourgeman would prefer the two go together. He told Breaking Defense it would be “better” if Rafael and IAI could align their listings, while conceding the logistics may not allow it. His concern about the sequencing of the Rafael IPO is straightforward. If IAI lists alone, Rafael becomes the only large Israeli defense firm still carrying the full weight of state regulation, competing against two rivals that have shed it.
Internal politics differ at the two firms. IAI’s workforce unions are more politically active than Rafael’s, which cuts both ways: more organized resistance to manage, but also more established channels for managing it.
The Classified Problem Nobody Has Solved
A significant portion of Rafael’s operations are secret, which has so far prevented an independent valuation of the company. For the Rafael IPO that is a real obstacle, not a technicality. Auditors cannot price what they cannot inspect. Every disclosure needs sign-off from the defense establishment.
Tourgeman’s answer is that this has been done before, and elsewhere. “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 on the precedent. Lockheed Martin, Raytheon and BAE Systems all run classified portfolios as listed companies. Scale is the difference. Those firms have decades of practice segregating what shareholders see from what governments see, and Rafael would be building that architecture under deadline.
Iron Beam, SkySonic and the Next Product Cycle
Two programs will shape how the market values Rafael’s future. Both are ahead of where skeptics expected them to be.
Iron Beam, the high-power laser interceptor, has been delivered to the Israeli Air Force in an advanced version and is working through operational integration. “As with the F-35’s integration into the Air Force and the process of using Iron Dome, it takes a certain amount of time for a system to become operational, but we are completely confident in the system’s excellent capabilities,” Tourgeman said. “It has already worked in the field and proven itself.” Economics are the story here. An interceptor costing a few dollars a shot against rockets costing thousands inverts the cost curve that has defined missile defense since Iron Dome entered service in 2011. Elbit is chasing the same physics with its airborne laser interceptor program.
SkySonic, Rafael’s hypersonic interceptor, sits further out on the timeline but further along than its 2023 unveiling suggested. “We currently know how to counter all existing threats in the arena, and SkySonic is at the peak of its development,” Tourgeman said. “We have achieved core capabilities in this area, and the decision to accelerate development depends on budget and resource allocation by the defense establishment.” Iran has stated its hypersonic ambitions openly. China is fielding a growing portfolio. A working interceptor would put Rafael in a category with perhaps two other companies on earth.
The Case Against Rushing the Rafael IPO
Not everyone inside Israel’s defense establishment wants this. Tourgeman 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. A listed Rafael answers to shareholders whose interests may not align with Israeli national security priorities, particularly on which export customers to accept and which loss-making but strategically essential programs to keep funding. Quarterly earnings pressure is a poor fit for weapons that take a decade to develop. And a defense company under sustained international political attack is exposed to divestment campaigns in a way a state-owned entity simply is not.
Timing is the other risk. Rafael would list into a defense-spending cycle running near a generational peak, driven by European rearmament and Middle East conflict. Growth of 30 percent is not a normal baseline. Investors buying at a valuation that extrapolates it may be buying the top.
Where Will Rafael List, and How Much Will the State Keep?
Two questions about the Rafael IPO remain open, and both run through the Knesset.
Legislators have not settled whether Rafael and IAI would list in Tel Aviv, in New York, or across both. A U.S. listing would open far deeper pools of capital and put Rafael in front of the same institutional investors who own Lockheed and RTX. It would also subject a company holding Israeli state secrets to SEC disclosure regimes and American litigation risk.
Nor has the government decided what stake it keeps. The IAI framework contemplates selling 30 percent. A comparable structure at Rafael would leave the state firmly in control while giving the company access to public capital and equity compensation. Whether 30 percent of a partially classified defense firm attracts a full valuation is the question underwriters will spend the autumn arguing about.
What is Rafael Advanced Defense Systems?
Rafael is an Israeli defense technology company fully owned by the government of Israel. It develops and manufactures the Iron Dome short-range air defense system, David’s Sling medium-range interceptors, the Iron Beam laser system, SPIKE anti-tank missiles and the Trophy active protection system. It reported revenue of NIS 21.7 billion, roughly $6.94 billion, in 2025 and employs about 12,000 people.
When will the Rafael IPO happen?
CEO Yoav Tourgeman said at the Farnborough Airshow in July 2026 that he is optimistic Rafael could be ready to go public before the end of 2026. No date has been set. The offering still requires Knesset decisions on where the company will list and what percentage the state will retain, plus defense establishment approval on disclosure of classified operations.
How much is Rafael worth?
No official valuation exists, because classified operations have prevented a full independent assessment. For reference, the Government Companies Authority has discussed selling 30 percent of Israel Aerospace Industries at a NIS 100 billion valuation, and Rafael’s order backlog of NIS 74.4 billion is approaching that of publicly traded Elbit Systems, which reported a $23.8 billion backlog.
Will Rafael list in Tel Aviv or New York?
Undecided. The Knesset has not determined whether Rafael and IAI would list on the Tel Aviv Stock Exchange, a U.S. exchange, or both. A U.S. listing offers deeper capital pools and a natural investor base alongside Lockheed Martin and RTX, but adds SEC disclosure obligations that are complicated for a company with a large classified portfolio.
Can investors buy Israeli defense stocks today?
Yes. Elbit Systems trades on both Nasdaq and the Tel Aviv Stock Exchange under ESLT and is the primary listed pure-play on Israeli defense. Rafael and Israel Aerospace Industries remain fully state-owned and are not currently investable through public equity, though IAI bonds trade in Tel Aviv.
Why does classified work complicate a defense IPO?
Public offerings require audited financials and material risk disclosure. When a large share of revenue comes from programs whose existence, customers and technical details are secret, auditors cannot independently verify segment performance and investors cannot assess concentration risk. Listed defense firms elsewhere handle this through classified-segment reporting approved by their governments, a framework Rafael would need to build with Israel’s defense establishment.
