Nordic private equity firms pursue cyber security acquisitions

[Pelican Press 0]

Nordic private equity firms pursue cyber security acquisitions

Nordic private equity groups are investing in cyber security companies amid growing demand for specialist services to

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Increasing interest in digital security is also driving the establishment of private-public partnerships to develop enhanced network defence and security solutions to counter rising threats.

The ever-present dangers lurking in the cyber sphere continue to influence public authorities and private businesses across the Nordic states to rethink their approaches to protecting their core networks and re-evaluate the need to increase

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Demand, combined with broader budgeting provisions for cyber security solutions and services by public and private organisations, has not gone unnoticed by Nordic private equity groups. Many have this year been busily engaged in scouting acquisition opportunities and adding IT cyber security firms to their technology portfolios.  

Among the most striking investment deals are Helsinki-based

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and Adelis Equity Partners’

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in Knightec to Stockholm-headquartered private equity group Ratos.

Cyber security, cloud, server and network services currently account for almost 80% of Netox’s recurring revenues. “The acquisition gives CapMan the opportunity to partner with Netox and strengthen its business model to support the expected high growth within niche markets,” said Pia Kåll, managing partner at CapMan Buyout. “The company is perfectly aligned with CapMan Buyout’s investment strategy.”

Similar to CapMan’s buy-in at Netox, the acquisition of Knightec by Ratos is likewise motivated by a strong balance sheet and the fast pace of growth the company is experiencing in the Nordic market for cyber security solutions and services. 

The Ratos acquisition of Sweden-based Knightec is also further evidence of how Nordic private equity firms are assembling deals and valuing target companies in the digital transformation and cyber security sphere. They are displaying highest interest in firms with operating project-based business models coupled with a focused growth strategy linked to cloud connectivity and cyber security.

Knightec co-founder and CEO Dimitris Gioulekas will retain a 30% interest under the terms of the deal struck between Ratos and exiting group Adelis. Knightec completed a number of high-profile strategic acquisitions under Adelis’s direction, including the bolt-on takeovers of digital security and transformation consultants Dewire, in 2019, and Daresay, in 2020.

Ratos’s business development vision for Knightec is to grow the company organically and through acquisitions. “Knightec holds a strong market position. It’s an excellent fit to our focus in a sector that will become an important area for Ratos going forward. The acquisition also strengthens our exposure in the growing consultancy industry,” said Ratos CEO Jonas Wiström.

Adelis followed up its divestment of Knightec by acquiring the Denmark-based IT security and infrastructure firm netIP in a transaction valued at €50.4m.

Recent Nordic investor interest in cyber security firms has also surfaced in a series of industry-led acquisitions and strategic partnerships. Finnish technology digital locking and mobile access management company iLOQ bought Oulu-based DreamIt, a supplier of digital security solutions and cyber defence software products.

“The acquisition strengthens iLOQ’s digital and IT security competence and enables us to develop new features for access management systems,” said Heikki Hiltunen, CEO at iLOQ.

Meanwhile, a stand-out industry-led IT security partnership in Norway saw offshore energy investment group Aker join internet of things (IoT) development company Cognite and Telenor in an ambitious three-way collaboration. The pivotal focus of the partnership is the establishment of Omny, a cyber security software company that will serve industry and operational technology.

Omny will fill a gap in the market, both in Norway and globally, for software to prevent cyber attacks and secure business operations, said Sigve Brekke, CEO of Norwegian telco Telenor.

Brekke added that with around 90% of today’s data having not existed just two years ago, the need to secure information held in cloud-based services was continuing to grow at a rapid pace. “We want to build a Norwegian software company that can be a strong global player in operational industrial security,” he said.

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