Sumit Dhawan, Proofpoint’s CEO, took the reins as head of the cybersecurity firm in 2022, a 12 months after it was acquired by Thoma Bravo for $12.3 billion. He urges the agency to think about strategic alternatives corresponding to mergers and acquisitions of smaller cybersecurity gamers to drive the corporate’s market enlargement and drive trade consolidation.
Proofpoint
LONDON — Personal cybersecurity agency Proofpoint is exploring bringing in exterior buyers for pre-IPO funding and mergers and acquisitions of smaller cyber corporations because it goals to return to the general public markets in 2026, Chief Government Sumit Dhawan instructed CNBC.
“We’re doubtlessly exploring the general public markets someday within the subsequent 12 to 18 months,” Dhawan, who took the reins as Proofpoint’s newly appointed chief in 2022, a 12 months after the corporate was acquired by the private investment company Thoma Bravo.
Dhawan added that the timing of Proofpoint’s IPO will nonetheless stay depending on general market situations in addition to the result of 2024 US Presidential Election.
After Thoma Bravo’s buyout of Proofpoint in 2021 and Dhawan’s subsequent appointment as CEO, the corporate’s administration has pushed for the agency to think about strategic alternatives corresponding to mergers and acquisitions of smaller cybersecurity companies to drive trade consolidation.
Noting that there are at the moment too many gamers within the cybersecurity market, Dhawan mentioned Proofpoint is searching for acquisition targets that provide a “strategic match” to the corporate — for the correct worth.
“It is occurred in loads of different expertise areas — it is occurred with infrastructure, it is occurred within the software platform house — the place you begin constructing fewer distributors however richer platforms, and because of this there will likely be consolidation,” Dhawan mentioned to CNBC in an unique interview this week.
“There are at the moment round 2,000 unprofitable cyber safety corporations which might be backed by ventures, so it is clear that they are going to both consolidate or doubtlessly stop to exist. As a result of there is no such thing as a means any market can have that many gamers. So it will occur, it is positively going to occur.”
Dhawan mentioned he is discovering there’s little “bid-ask unfold” out there proper now with regards to cybersecurity alternatives, which means goal corporations are asking for extra money on the sale worth than the valuations they’re being supplied. However he added that he sees some “nice alternatives” out there.
A key precedence for Proofpoint because it seems to be for M&A targets is geographic enlargement, Dhawan famous, including that the corporate sees large development alternatives in non-English-speaking nations corresponding to Japan, South Korea and the Center East, the place cyber breaches are skyrocketing as a result of rise of generative AI.
The variety of enterprise electronic mail compromise assaults elevated by 35% in Japan, 31% in South Korea and 29% within the United Arab Emirates, based on information shared by Proofpoint with CNBC. This occurs as a result of generative AI makes it simple for hackers to customise emails in a number of languages, based on Dhawan.
The trail from the non-public to the general public
Based in 2002 in Silicon Valley, Proofpoint creates expertise that helps corporations forestall phishing makes an attempt and different cyberattacks throughout a variety of platforms, together with electronic mail, social media, cellular and the cloud.
The corporate competes with the likes of Palo Alto Networks, CrowdStrike and Fortinet, whose shares have risen sharply over the previous 12 months. CrowdStrike — the corporate that caused global IT disruption this year as a result of a software program downside — up 65% from the earlier 12 months.
Shares of Palo Alto Networks and Fortinet rose 44% and 32%, respectively, over the identical interval.
Proofpoint went public within the US in 2012 however was subsequently delisted after Thoma Bravo acquired the corporate in $12.3 billion deal in 2021. The buyout got here after investor issues about slowing income development.
Now, Proofpoint is as soon as once more seeking to dominate the general public markets.
“We’re a bit of totally different from the everyday corporations that go IPO,” Dhawan mentioned. “They are usually smaller. They have a tendency to have a really totally different profile. They have a tendency to have yield uncertainty and have a tendency not to have the ability to consolidate simply.”
Proofpoint’s going public is not going to mark the primary time an organization acquired by Thoma Bravo by a non-public buyout has gone public for a second time. In 2019, cybersecurity agency Dynatrace, which Thoma Bravo took non-public in a 2014 buyout, went public once more in a New York itemizing.
Proofpoint might undergo “a number of rounds” of financing to increase possession of the corporate from different non-public buyers, Dhawan instructed CNBC, including that personal placements — gross sales of shares to pre-selected buyers, versus common gross sales to the general public — are amongst choices he’s contemplating.
“We’re near beginning the method” of elevating funds from buyers exterior of its non-public homeowners, Dhawan mentioned. Nonetheless, he emphasised that the corporate has not formally began this course of.
The Proofpoint boss mentioned he hopes what units his firm other than different tech and cybersecurity companies searching for an identical IPO route is an effective stability between development and profitability, double-digit development and robust market management.
