Private Equity News & Analysis

Balderton makes 4x with sale to Cisco

Internet security-focused software maker ScanSafe is the latest to benefit from Cisco's M&A appetite.

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Balderton Capital has made four times its investment in ScanSafe, which is being sold to Cisco for $183 million. A spokeswoman did not disclose the amount of the purchase price Balderton would receive.

The venture firm, which owns a 30 percent stake in ScanSafe, will receive $54.9 million from the deal, according to the Irish Times.

Balderton first backed the internet security software maker in 2004, when it was founded by brothers Eldar Tuvey and Roy Tuvey. It subsequently participated in two further funding rounds, however it has not disclosed the total sum invested.

The internet security sector is expected to grow to $2.3 billion by 2012, according to ScanSafe.

Subject to undisclosed “standard” closing conditions, the deal is expected to close in the second quarter of Cisco's fiscal year 2010, according to a statement.

ScanSafe is the latest company to be swept up in an ongoing tech acquisition spree by Cisco, the world's largest newtorking company. This month alone it has agreed three deals worth more than $6 billion. It agreed to pay roughly $3 billion for Norwegian video networking site Tandberg, which had also reportedly been approached by private equity firm Silver Lake. Cisco also said it would pay $2.9 billion for Starent Networks, a mobile internet infrastructure company.

Cisco chief executive John Chambers said earlier this month he expected tech M&A to heat up – with Cisco presumably playing a lead role in aquisitions, as it did during the tech bubble.

Paul Deninger, chief executive of investment bank Jefferies, recently cautioned that M&A exits for venture backed companies were concentrated in the hands of few corporate buyers. Cisco, Oracle, eBay and Hewlett Packard represented nearly 40 percent of all tech M&A transactions in 2008, he said during a speech earlier this month at the European Private Equity and Venture Capital Association's venture forum in Berlin.

London-based Balderton in January held a $430 million first close on its fourth fund, targeting $500 milion.