The companies behind two of the world’s most battle-tested missile defense systems — Iron Dome and the Arrow interceptor — are not heading to public markets anytime soon. According to Calcalist Tech, both Rafael Advanced Defense Systems and Israel Aerospace Industries (IAI) are unlikely to reach an IPO before 2027, and the queue just got longer with the addition of Tomer, the state-owned rocket propulsion company. For investors watching the surge in global defense spending, the timeline is a sobering reality check on how slowly government-linked defense giants can move toward privatization.
The delay isn’t a sign of weakness — demand for these systems has never been higher. But the structural and political complexity of listing state-controlled defense contractors is considerable, and Israel’s high-tech funding ecosystem, while robust, operates in a different lane from the national security apparatus that governs these firms.
Three Giants, One Crowded Pipeline
Rafael, the maker of Iron Dome alongside the David’s Sling system, and IAI, which produces the Arrow 2 and Arrow 3 long-range interceptors, have both been discussed as IPO candidates for years. Arrow 3 famously demonstrated exo-atmospheric intercept capability — shooting down ballistic missiles outside the Earth’s atmosphere — making IAI one of the few defense companies in the world with that operational pedigree. Yet turning that capability into a public equity story is a different challenge entirely.
Now Tomer joins the list. The company develops solid-fuel rocket propulsion systems and is a critical supplier to several of Israel’s missile programs. Its inclusion in the IPO conversation signals broader ambitions to unlock private capital across Israel’s defense industrial base — but it also means three major state-linked entities are now competing for the same regulatory approvals, government sign-offs, and investor appetite. None of them, per the Calcalist Tech report, is expected to list before 2027 at the earliest.
Why the Timeline Keeps Slipping
Listing a company like Rafael or IAI isn’t like taking a SaaS startup public. These are entities deeply embedded in Israel’s national security framework, with technology export restrictions, classified program elements, and government shareholding structures that require extensive legal and regulatory untangling before a prospectus can be filed. The Israeli government has to agree on how much equity to sell, at what valuation, and under what disclosure constraints — a process that moves at the pace of coalition politics, not capital markets.
The broader geopolitical context adds another layer. Israel’s defense sector has seen extraordinary operational demand since late 2023, with Iron Dome and Arrow systems logging real-world intercepts at a pace that both validates the technology and strains production capacity. That operational tempo makes it harder, not easier, to pause for the kind of deep financial auditing and restructuring that a public offering requires. Investors want clean books and predictable revenue — neither of which is easy to present when your biggest customer is the Israeli Ministry of Defense and your product is actively being fired in combat.
For the venture and institutional investors tracking Israel’s defense tech moment — and there are many, given the country’s growing reputation as a security innovation hub — the 2027 horizon means patience is the only play. As $365 million raise showed, capital is ready to deploy into Israeli security technology. The question is when the country’s most storied defense manufacturers will finally give public markets the chance to get in.
