Cybersecurity company Proofpoint explores external funding as it nears an IPO

LONDON – Privately held cybersecurity firm Proofpoint is exploring tapping outside investors for pre-IPO funding and considering mergers and acquisitions of smaller cyber companies as it seeks to turn around return to the public markets in 2026, CEO Sumit Dhawan told CNBC.

“We are looking at the possibility of exploring public markets over the next 12 to 18 months,” said Dhawan, who takes over as Proofpoint’s newly appointed director in 2022, a year after the company ”. was acquired by private equity firm Thoma Bravo.

Dhawan added that the timing of Proofpoint’s IPO will still depend on overall market conditions as well as the outcome of the IPO. US presidential election 2024.

Since Thoma Bravo’s acquisition of Proofpoint in 2021 and Dhawan’s subsequent appointment as CEO, the company’s leadership has pushed the company to consider strategic opportunities such as mergers and acquisitions of companies Smaller cybersecurity to stimulate industry consolidation.

Noting that there are currently too many players in the cybersecurity market, Dhawan said that Proofpoint is currently looking for acquisition targets that offer a “strategic fit” for the company – at the right price.

“This has happened in many other technology spaces — it’s happened in infrastructure, it’s happened in the application platform space — where you start building Build fewer suppliers but richer platforms and the result will be consolidation.” interview this week.

“At this point, there are about 2,000 venture-backed nonprofit cybersecurity companies, so it’s clear they’re going to be consolidated or potentially not survive. Because no other market can have so many players. So that’s going to happen, it’s definitely going to happen.”

Dhawan said he sees a bit of an “offer arbitrage” in the market today when it comes to cybersecurity opportunities, meaning target companies are asking for more money at the asking price than their peers. the valuation they are given. But he added that he is seeing some “great opportunities” in the market.

Proofpoint went public in the US in 2012, but was later delisted after Thoma Bravo acquired the company in an acquisition. 12.3 billion USD deal in 2021. The acquisition comes after investors were concerned about slowing revenue growth.

Now, Proofpoint is once again looking to tap into the mass market.

“We are a little different from the typical companies preparing for an IPO,” Dhawan said. “They tend to be smaller. They tend to have very different profiles. They tend to be uncertain in terms of profitability and they tend not to be in a position to easily consolidate.”

Taking Proofpoint public wouldn’t mark the first time a company Thoma Bravo acquired in a private equity buyout has made a second IPO. In 2019, cybersecurity company Dynatrace, which Thoma Bravo took private in a 2014 acquisition, went public again in New York.

Proofpoint will go through “multiple rounds” of funding to expand ownership of the company by other private equity investors, Dhawan told CNBC, adding that the private placements – share sales to pre-selected investors instead of selling to the general public – among them. options it is considering.

“We are about to begin the process” of raising capital from investors other than private equity owners, Dhawan said. However, he emphasized that the company has not officially started this process yet.

The Proofpoint boss said he hopes that what sets his company apart from other technology and cybersecurity companies seeking a similar IPO route is a good balance between growth and profits, increasing Double-digit growth and strong market leadership.