K.K.R. Enters Cybersecurity Deal; Extends Company Flurry Activities

By klaireaustria

Dec 07, 2016 07:14 AM EST

Kohlberg Kravis Roberts was among the first investors pouring money into the technology industry. With a nearly $2 billion deal, the investment giant will extend its multibillion-dollar flurry of activity from the past year.

Though the American private equity firm has had a technology investment practice for decades - George R. Roberts, a co-founder, has long been based in Menlo Park, Calif., in the heart of Silicon Valley - the firm has been building its presence in that sector in recent years.

It is in the process of closing its first fund dedicated to so-called growth investments - in large and more developed tech start-ups - after having earlier removed such deals from its balance sheet. (Those investments included stakes in the speakers maker Sonos and the daily fantasy site FanDuel.)

K.K.R. has also continued to strike leveraged buyouts for the likes of Epicor. And it is increasingly investing in publicly traded companies, serving as a management-friendly investor.

Over all, Mr. Chen said, K.K.R. is looking for companies seeking international growth, so that it can assist them in finding and financing acquisitions of their own.

Even as the field of investors in tech firms has grown more crowded - from traditional venture capital firms and leveraged-buyout specialists to more unusual entrants, like the Japanese tech giant SoftBank - Mr. Chen said his company had not experienced difficulty finding new investments.

K.K.R.'s deal for Optiv would see it take over a company that operates in a sector of enormous growth after a series of high-profile security breaches at corporations and government agencies.

Optiv was formed in 2015 with the merger of two cybersecurity providers, Accuvant and FishNet Security. The resulting company originally sold cybersecurity software, but it has since broadened its offerings to provide security consulting services.

Optiv, which had $947.3 million in revenue in 2015, filed confidentially for an initial public offering last year and revealed the plans last month. But Mr. Chen said K.K.R. had been approached by Optiv's bankers early last month about the possibility of buying the company.

The company is owned by a group of investors that includes the Blackstone Group, which would keep a minority stake in the business. The deal is expected to close in the first quarter of next year.

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