Suits maker Bagir Group Ltd. raised $33 million at a company value of $66 million, after money, in its IPO on London’s Alternative Investment Market (AIM)

What is so special about this announcement of a small-time Israeli textile company, which uses cheap overseas labour (including Egyptian)? After all, the AIM market is coming back into fashion, and dozens of Israeli firms had raised money there prior to 2008.

Take two steps back. First, originally, Bagir was part of Polgat, which represented the old economy of Israel as per the 1980s. We are talking about large factories in established industrial sectors that were protected by tariffs.

Polgat regrouped over the decades. Bagir was spun off. But less than a decade ago, it lost its key contract with Marks & Spencer in the UK. That was a big commercial ‘ouch’.

Leap forward to 2014 and check out Bagir’s website. “One in six men in the UK own a suit made by Bagir”. That is a statement of phenomenal success. Clients include major chains like John Lewis and Austin Reed. Sales are also being developed in new territories, such as Australia.

There are many reasons for the turnaround, starting with quality management. I would like to focus on the company’s ability to pinpoint a historical weakness in their market and find an effective solution. The ‘secret weapon‘ is an ability to produce suits that can be readily washed and still look new. Now that is very important to the consumer, who has just invested several pricey dimes in a couple of pieces of ‘rags’.

Israel is noted for entrepreneurship, specifically in the high-tech sector. This is just another way of using that brawn while then applying it to traditional industries.