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Online privacy company Kape raises $115 million in a share offering to the public

Online privacy company Kape raises $115 million in a share offering to the public

The offering will allow the Teddy Sagi Group cybersecurity and privacy protection company to continue expanding its activities through strategic acquisitions and organic growth

CTech | 16:32  29.10.2020

Kape, the Teddy Sagi Group cybersecurity and privacy protection company, has raised $115 million in a share offering to the public. According to the company, the offering, which had participation from large U.S. and European funds and investment bodies, was oversubscribed – five times the amount that was raised.

Leading institutions in the U.S., Europe and Israel took part in the offering together with full support of all the existing major shareholders. The company said that Kape's success in the U.S. has led to major interest and expansion of the company's American investor base.

Teddy Sagi. Photo: Amit Shaal Teddy Sagi. Photo: Amit Shaal Teddy Sagi. Photo: Amit Shaal

The company's senior management, including CEO Ido Erlichman, also took part in the offering and personally bought a large number of shares. "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,” Erlichman said.

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 management to 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 in total. Last December, Kape acquired U.S. company PIA, which specializes in providing encrypted solutions for digital data and privacy on the web, for $128 million.

Kape operates in 160 countries and has 350 employees. It 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 encrypt access to the web. The U.S. market is now the main market in which the company operates. More than half of its 2.4 million customers are in the U.S., using the company's products on a highly profitable SaaS business model.

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 in cash in its coffers.

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.

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 results was moving forward as planned, and that the company's revenue has quadrupled over the past four years from $38 million in 2016 to a revenue forecast of $120-123 million in 2020, and with adjusted EBITDA (earnings, interest, taxes, depreciation and amortization) of $35-38 million.

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