Apax to buy stake in IT security company

The firm has agreed to acquire a majority stake in Sophos from the company’s founders and TA Associates, which first invested in Sophos in 2002.

Apax Partners has agreed to buy a majority stake in Sophos, an information technology security and data protection provider.

The Wall Street Journal reported Apax will pay $580 million for a 70 percent stake in the company.

Apax will acquire its stake from the company’s founders and TA Associates. TA invested £41 million (€47 million; $62 million) for a minority stake in the anti-virus company in 2002. At the time of TA's investment, the firm valued the company at about $275 million, according to Ajit Nedungadi, a managing director in TA's London office. The Apax deal values the company at about $830 million.

The company did try to go public on the London Stock Exchange in December 2007, but “the public markets were starting to fall apart at the time”, Nedungadi told PEO. Also, “the level of appetite for growth stocks in the UK is something we've always had trouble with. The [UK] market is less willing to buy into growth stories.”

The company was expected to be valued at about $500 million in the public float, according to media reports at the time.

Sophos provides anti-malware to protect against computer viruses and spyware. The company also provides firewall and other security management for computer networks, and encryption and data leak prevention.

“We identified the security software space as an attractive investment area for us given its secular growth driven by ever-increasing malware threats and high barriers to entry,” Salim Nathoo, co-head of Apax’s technology and telecom team.

Apax’s other tech and telecom investments include Promethean World, which provides interactive learning technology, SMART Technologies, which makes interactive collaboration products, and Intelsat, a global satellite operator.

The firm, based in New York and London, is investing its seventh fund, which closed on €11.2 billion in 2007.