Warburg Pincus to invest $8m in Cyren rights offering

Lior Samuelson
Lior Samuelson

Israeli cybersecurity company Cyren has announced a rights offering to raise up to $12.5 million.

Israeli cybersecurity company Cyren (Nasdaq: CYRN) has announced a rights offering to raise up to $12.5 million. $8 million of this has already been guaranteed by Cyren controlling shareholder US fund Warburg Pincus. The offering will give shareholders a right to purchase one share for $1.73 for every 7.55 shares that they hold in the company. This price is 5.5% higher than the company's current share price. Shareholders will also be able to purchase additional shares if the rights to them are not exercised.

Cyren is listed on Nasdaq's secondary exchange at an $89 million market cap, after being delisted from the Tel Aviv Stock Exchange five months ago. The company provides cloud-based cybersecurity solutions. Cyren's CEO is Brett Jackson, who recently replaced Lior Samuelson in the job. Samuelson retained the chairman's post.

Cyren's revenue grew 15.1% to $19.4 million in the first half of 2019, but the company still posted a loss in the period, despite reducing 2.8% to $9.1 million. On a non-GAAP basis, which excludes various accounting items, the company's first half net loss was $8.5 million. With the publication of the company's results, Jackson said that his main goal was to increase Cyren's revenue, and that he was encouraged by the market opportunity he saw for the company.

Warburg Pincus first invested two years ago

Warburg Pincus became the largest shareholder in Cyren almost two year ago by acquiring 21% of the company's shares for $19.6 million in a private placement at $1.85 a share. At the same time, Warburg Pincus filed an offer to purchase aimed at increasing its stake in the company to 75% at $2.50 a share. The offer was not completely accepted, but Warburg Pincus nevertheless reached a 51% holding in Cyren after investing an additional $43 million.

Cyren's current share price is 11-34% lower than the prices as which Warburg Pincus invested in the company. The current value of the investment bank's holding in Cyren is $45.2 million, meaning that Warburg Pincus has lost 27% of its investment on paper.

Warburg Pincus is also the controlling shareholder in credit card company Max (formerly Leumi Card), after completing its acquisition of the company from Bank Leumi and Azrieli Group early this year at a company valuation of NIS 2.5 billion. Other shareholders in Max are Menorah Mivtachim and Clal Insurance (10% each) and Allied Group (4.9%).

Published by Globes, Israel business news - en.globes.co.il - on September 12, 2019

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

Lior Samuelson
Lior Samuelson
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