CVC buys ironSource stake for over $400m

Tomer Bar Zeev  / Photo: Jonathan Bloom , Globes

With annual revenue of $1 billion, the Israeli digital ad company plans expanding operations in the mobile phone and gaming sectors.

Israeli digital advertising technology company ironSource has announced that UK private equity firm CVC Funds has agreed to acquire a minority stake for over $400 million. The exact stake and precise investment were not specified but sources close to the deal have spoken of a 25% stake for about $450 million, giving the company a valuation of about $1.8 billion.

The Tel Aviv-based company said that, "The partnership reflects a shared long-term vision to further strengthen ironSource's position as a global market leader in the high-growth mobile advertising and mobile gaming technology markets and will serve to accelerate strategic growth."

45% of the company's shares are held by its founders - CEO Tomer Bar Zeev, and the brothers Itai, Eyal and Roy Milrad who set up the company in 2009. Other shareholders include Viola Ventures, which holds a 14% stake, North83, Disruptive Technologies, Saban Capital Ventures, Leumi Partners and Clal Industries. The company has raised $120 million to date. Sources say that much of the $400 million investment by CVC will not be injected into the company for investment but will rather go to the founders who want to realize some profit in their holdings.

Bar Zeev said, "As one of the world's most respected private equity firms, CVC has a track record of successfully partnering with companies to drive global growth. As such they are the perfect partner for this next phase in our journey, as we continue to scale internationally, engage with A-class partners and invest heavily in building out our offering for game developers."

ironSource claims to have been profitable from almost day one, and says it is on track to finish 2019 with $1 billion of revenue. The company works with a range of customers including software, app and game developers, telecom operators, and mobile device OEMs. ironSource focuses on developing technologies for app monetization and distribution, with its core products targeting game developers.

Bar Zeev added, "We're witnessing the creation of a sector, gametech, which supports this growing ecosystem, with tailor-made tech solutions such as advertising, marketing, analytics, market intelligence, CRM and more. Our continued investment in this industry is part of a wider goal to be the go-to partner for any game developer looking to scale their game business."

Another key growth driver for the company is Aura, ironSource's solution for mobile carriers and device manufacturers. Aura provides a dynamic engagement and content distribution solution, empowering OEMs and telecoms operators to build ongoing relationships with their customers, ultimately turning those customers into engaged users. The technology is integrated on more than 120 million mobile devices globally, through partnerships with the top telecoms operators in the US and international mobile OEMs.

"By combining best-in-class technology with strategic acquisitions we've proven our ability to support the growth of our clients and create a unique experience for their users, and that's something we plan to continue investing in moving forward," concluded Bar Zeev.

CVC Growth Partners managing director Sebastian Kuenne said, "We are very excited about CVC Funds' first technology deal in Israel. Israel is a hub for leading edge technology companies and ironSource is a prime example. We are excited by the opportunity to partner with ironSource's founders to continue to provide leading technology solutions to its customers."

Published by Globes, Israel business news - en.globes.co.il - on October 4, 2019

© Copyright of Globes Publisher Itonut (1983) Ltd. 2019

Tomer Bar Zeev  / Photo: Jonathan Bloom , Globes
Tomer Bar Zeev / Photo: Jonathan Bloom , Globes
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