Permira Growth Opportunities acquires $40 million stake in BioCatch
In its first investment in Israel since launching its local office, Permira purchased shares from existing owners and became the third largest shareholder in the behavioral biometrics company which develops fraud protection for financial institutions
Permira Growth Opportunities has acquired a $40 million stake in behavioral biometrics company BioCatch, Calcalist has learned.
The purchase, made from shareholders who invested in the company in its early funding rounds, makes Permira the third largest shareholder in the company. The largest shareholder is the American investment fund Bain Capital and the second is Maverick Capital.
BioCatch develops, using artificial intelligence, a product for the financial markets that verifies identities through behavioral biometrics. The technology analyzes an online user’s physical and cognitive digital behavior to protect individuals and their assets and is used by banks and financial institutions to protect against fraud.
The technology developed by the company is designed to identify and record about 300 nuances that distinguish each person, in the way they use a computer or smartphone, such as the way they move the mouse, the way they hold the phone or type. These parameters are cross-referenced by the software with other behavioral data it has about the same customer from past experience, and thus cases of hacking into bank accounts, opening fake accounts, unlawfully claiming tax refunds by pretending to be eligible and other fraudulent attempts are identified. The company alerts its clients in such cases and the bank establishes immediate contact with the customer.
Gadi Mazor serves as the CEO of the company, which operates from the Azrieli Towers in Tel Aviv with offices in London and the U.S.
The company's clients include 100 banks, including 25 of the 100 largest banks in the world, such as Barclays, NatWest and other large banks in England and Australia. The company employs 270 people and has grown by about 50% a year in terms of sales and about 20% in terms of customer volume (with existing customers also increasing their activity every year). Sales began in 2016 and in 2023 the company is expected to finish for the first time with sales of more than $100 million.
The company’s most recent funding round was in 2020 when it raised $145 million led by Bain Capital. Most of the amount was used to purchase shares from existing shareholders. Another investor in the round was Industry Ventures, which operates in the secondary market. Other investors in the company that participated in the round are Maverick Capital, the venture capital investment arm of American Express, and the investment platform OurCrowd.
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The entry of Permira is intended to provide financial backing for acquisitions and mergers that the company is considering that may require an additional injection of capital, and to strengthen its presence in Europe, Permira's home continent. However, the transaction was not an investment into the company but a secondary transaction to purchase shares from existing shareholders. In the past, Permira invested through another fund in the Israeli company Netafim, ultimately selling its controlling stake for $1.5 billion to Mexican corporation Mexichem - around two-and-a-half times the price for which it was purchased. Ran Maidan, currently the Head of Israel at Permira, served as CEO of Netafim throughout the period.
Permira raised $4 billion for its second growth investment fund (PGO II) in December 2021. Permira's funds have made more than 300 investments in four main sectors: technology, consumerism, services and medicine. Permira employs over 470 people in 15 offices across Europe, the U.S., and Asia.
