The Riverside Company, a multinational private investor that’s focused on the smaller end of the middle market, announced recently that it has acquired a controlling stake in Cryptomathic, a Danish provider of high-end hardware agnostic secure server solutions.
Cryptomathic provides solutions to various industry sectors, such as banking, government, technology manufacturing, Cloud and mobile.
Cryptomathic sells different security solutions such as key management, e-signature and authentication, eID, mobile app security and EMV to an international client base that’s mainly focused on banking and related financial services.
Riverside, which is being supported by its institutional co-investors, will be teaming up with Cryptomathic’s founder and management who continue to occupy management positions and a minority stake in the initiative.
Established in 1986, Cryptomathic is a pioneer in offering secure solutions to the financial services sector. It was one of the first firms to commercialize cryptographic algorithms, and during the last 35 years has developed one of the best portfolios of cybersecurity solutions.
Household names in banking and tech depend on the firm’s technology to secure their clients’ data. Cryptomathic holds more than 30 different patents and was named one of the 40-most innovative firms in the world by the World Economic Forum (WEF).
The current market for high-end security software is quite large, fast-evolving and fairly resilient. The addressable market amounted to approximately €5 billion last year and is now on track to expand at a 20% CAGR from 2020 to 2025.
Increasing volumes of data needing to be protected and rising numbers of new cyberattacks with greater degrees of sophistication require robust solutions like those offered by Cryptomathic.
Riverside became interested in Cryptomathic’s market leadership at the top level of crypto-based cybersecurity software where the most stringent requirements exist – a key area of the market where competition is fairly limited at the moment – as well as the firm’s global presence and competent management team. The firm reports a high level of customer retention with the opportunity for steady organic growth, and expansion into different customer and product verticals.
Karsten Langer, Managing Partner of Riverside Europe, stated:
“Cryptomathic is uniquely positioned as one of only a few vendors on a global scale to have a solid track record in cryptography. In a world of ever-increasing cyber threats, there are few business sectors of greater importance than data security, identity verification and authorisation. We look forward to working with the company’s founder and talented management team to drive further expansion of the business into new geographies and industries.”
Riverside has many years of industry experience investing in the Software & IT industry. The company has made over 180 investments in this specialization and has a team of experts who are focused on expanding the operations of these firms.
Michael Weber, Senior Partner of Riverside Europe, remarked:
“We are very excited about our investment in Cryptomathic. This is a great new case of Riverside Europe partnering with a founder-based team and supporting the business to take it to the next level of growth. Riverside Europe has a great track record in such parternships, in particular with founders in technology-driven business models. We aim to invest into further international growth, product development and in the sales and marketing function of Cryptomathic. As a part of our growth strategy, we will also look into add-on opportunities in the cryptography space. We are absolutely convinced that together with the founders and management team, we will create the leading technology player for cryptography solutions in Europe.”
Dr. Peter Landrock, founder and Executive Chairman of Cryptomathic, added:
“Having run and internationally expanded Cryptomathic for 35 years, the owners decided to find a partner to help grow the company further, expanding in various areas such as mobile and cloud. The Riverside Company is an impressive company with a strong track record and the perfect partner for taking Cryptomathic to the next level.”
Working cooperatively with Langer and Weber on this deal were Operating Partner Julian Heerdegen, Senior Director Jeroen Lenssen, VP Dan Parksjö and Associate Felix Lindberg. The investment has reportedly been sourced for Riverside by VP Origination Ali Al-Alaf.
Riverside has been advised on this transaction by Bech Bruun, Allen & Overy, Oliver Wyman, PwC, Deloitte and WDP while the firm and founders have been advised by EY Corporate Finance and Horten.
Debt and equity co-investment has been offered by Arcmont and Riverside’s institutional LPs.