KAPE Technologies raises $115m in London offering

Ido Erlichman Photo: Sharon Deri

Controlling shareholder Teddy Sagi bought shares worth $55.7 million in the offering of the cybersecurity and privacy protection company.

Israeli cybersecurity and privacy protection company KAPE Technologies (LSE: KAPE) has raised $115 million in a secondary offering, which had major participation from large US and European funds and investment bodies and Israeli institutional investors. The offering was five times oversubscribed.

Most significantly KAPE, which is controlled by the Teddy Sagi Group, has expanded the company's American investor base, with significant demand for from giant US funds. The US market is now the main market in which the company operates. More than half of its 2.4 million customers are in the US, using the company's products with a highly profitable SaaS business model.

The offering also had the full support of all the existing major shareholders. The main shareholder in KAPE is businessman Teddy Sagi, who held a 66.9% stake before the latest offering. In the offering he bought additional shares worth $55.7 million and after the offering Sagi's stake will be slightly diluted to about 65% of the company.

The company's senior management including CEO Ido Erlichman also took part in the offering and personally bought large numbers of shares.

Ido Erlichman became KAPE CEO four years ago and since then revenue has quadrupled while the company's share price has risen hundreds of percentage points. The capital that has now been raised will enable KAPE's management to speed up its strategic growth and make additional strategic acquisitions. In recent years, KAPE has consolidated its status as a leading player in the web privacy market. In the past five years, the company has made acquisitions worth $159 million overall. Last December, KAPE acquired US company PIA, which specializes in providing encrypted solutions for digital data and privacy on the web, for $128 million. KAPE thus became one of the largest companies in this field in the US.

The offering will allow KAPE to buy the shares of PIA's founders, Andrew Lee and Steven DeProspero. In addition, the company can undertake additional deals in the privacy protection sector. After completing the capital raising, KAPE will have $52 million cash in its coffers.

KAPE is traded on the London Stock Exchange with a market cap of $440 million. The company reported that in the third quarter growth in its activities is moving forward as planned, and that the company's revenue has quadrupled over the past four years from $38 million in 2016 and the revenue forecast for 2020 is $120-123 million and with adjusted EBITDA (earnings, interest, taxes, depreciation and amortization) of $35-38 million.

KAPE CEO Ido Erlichman said: "We are delighted to have the full and consistent backing of Teddy Sagi and welcome the new investors. The major demand for the offering is a result of strenuous work and provides a boost for management and staff. KAPE is already currently positioned as a leader in the web privacy market, and the capital raised will enable us to speed up the implementation of our growth strategy and be a significant company in the sector.

KAPE, which specializes in cyber security and privacy protection through anonymous user solutions, has two main product lines: solutions for web privacy; and protection against malicious programs. KAPE's biggest brands are PIA, and CyberGhost, which provide digitally encrypted solutions and secure and encrypted access to the web.

KAPE operates in 160 countries and has 350 employees. The offering was conducted by the following companies: to Israeli institutional bodies - Barak Capital Underwriting; in the US - Stifel Investment Bank; and in Europe Shore Capital.

Published by Globes, Israel business news - en.globes.co.il - on October 29, 2020

© Copyright of Globes Publisher Itonut (1983) Ltd. 2020

Ido Erlichman Photo: Sharon Deri
Ido Erlichman Photo: Sharon Deri
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