Keensight Capital expects a double impact from the boom in generative AI technologies such as ChatGPT on its planned acquisition of cybersecurity company Nomios from IK Partners, managing partner Philippe Crochet told PE Hub Europe.
The Paris-headquartered growth buyout firm, which has €5 billion of assets under management, announced on 27 June that it was in exclusive talks to buy Nomios, a cybersecurity and secure networking product and service provider. Nomios, also headquartered in Paris, has offices in Amsterdam, Brussels, Dortmund, Paris, London, Milan and Warsaw.
While cybersecurity generally is a “fast-growing, extremely resilient” sector thanks to the increasing number of cyber-risks, generative AI will likely act as a further catalyst, said Crochet.
Terence Jackson, chief security adviser at software giant Microsoft, warned in a Forbes article in April that through generative AI, “attackers may generate new and complex types of malware, phishing schemes and other cyber dangers that can avoid conventional protection measures”.
That creates a potential double benefit for cybersecurity firms.
“First, cybercriminals can benefit from it, which creates additional constraints for corporates to defend themselves,” said Crochet. “So that will drive the need for more sophisticated cybersecurity solutions.
“But on the cybersecurity side, with AI you can create tools that can monitor much more efficiently than a human being, and automate certain tasks. That comes with new solutions that Nomios can integrate and manage.”
Expanding in that sector will likely come via partnerships with software vendors, as Nomios tends not to buy such companies.
Growth
No financial terms for the acquisition were disclosed, but there was a leverage component, which was unitranche debt. That said, “Keensight is focused mostly on organic growth, so when we use debt, we try not to limit the growth of the company with too much”, said Crochet. “It’s not our DNA. We always go for a reasonable amount of leverage, even if a company has very good cash conversion.”
Keensight plans to grow the business in three ways: geographically, by customer base and by product.
“The company has proven very successful in operating in different countries,” said Crochet. “It’s very strong in France, the Netherlands, the UK, Italy, Poland, Belgium and Germany. On top of that, if we can acquire additional expertise or complementary expertise, we can cross-sell on a customer base.
“Cybersecurity is a very deep market, with lots of solutions and expertise. On top of organic growth, Nomios is a very natural consolidation player, and we’ll also implement an M&A strategy to buy companies operating in the cybersecurity space.”
Blue-chip
Keensight was attracted to Nomios ahead of those other companies because of its “management, strong expertise, very strong scale in terms of geography, large blue-chip customers that it has been working with for years, and also the high level of retention with employees, which makes them quite unique and different”, said Crochet.
Part of that growth came during IK Partners’ ownership, which began in January 2019.
Under the London-headquartered private equity company’s ownership, Nomios more than doubled its revenues to €400 million, according to a release. It also launched new initiatives such as security operating centres, or ‘SOCs’, and expanded geographically via two acquisitions, in Poland and Italy.
The Italian add-on came in February, when the company bought Aditinet, a system integration and professional services firm that focuses on cybersecurity.
The Rome-headquartered company had annual revenue of €40 million.
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