The Riverside Company, a global private investor focused on the smaller end of the middle market, has acquired a controlling stake in Cryptomathic, a leading Danish provider of high-end hardware agnostic secure server solutions to a wide range of industry sectors, including banking, government, technology manufacturing, cloud and mobile. The company sells state-of-the-art security solutions including key management, e-signature and authentication, eID, mobile app security and EMV to a global customer base primarily in banking and other financial services sectors. Riverside, supported by its institutional co-investors, is partnering with Cryptomathic’s founder and management team who continue to hold key management positions and a minority stake in the business.
Founded in 1986, Cryptomathic has been a pioneer in providing secure solutions to the financial services sector. It was one of the first companies to commercialise cryptographic algorithms, and over the past 35 years has built up one of the strongest portfolios of cybersecurity solutions in the market. Global household names in banking and technology rely on the company’s technology to secure their customers’ data. Cryptomathic holds over 30 patents and was named one of the world’s 40 most innovative companies by the World Economic Forum in the past.
The market for high-end security software solutions is large, fast growing and resilient. The total addressable market amounted to around €5 billion in 2020 and is expected to grow at a CAGR of 20% between 2020 and 2025. Increasing volumes of data needing to be protected and more frequent cyber-attacks with ever greater degrees of sophistication require increasingly powerful solutions such as those provided by Cryptomathic.
Riverside was attracted by Cryptomathic’s market leadership at the top level of crypto-based cybersecurity software where the strictest requirements exist – a segment of the market where competition is limited – as well as the company’s international presence and strong management team. The company enjoys a high level of customer retention with the opportunity for robust organic growth, as well as expansion into new customer and product verticals.
Karsten Langer, Managing Partner of Riverside Europe, commented:
“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 decades of experience investing in the Software & IT industry. The firm has completed more than 180 investments in this specialisation and has a team of global experts dedicated to growing these companies.
Dr. Michael Weber, Senior Partner of Riverside Europe commented:
“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, commented:
“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 with Langer and Weber on this transaction were Operating Partner Julian Heerdegen, Senior Director Jeroen Lenssen, Vice-President Dan Parksjö and Associate Felix Lindberg. The investment was sourced for Riverside by Vice-President Origination Ali Al Alaf.
Riverside was advised by Bech Bruun, Allen & Overy, Oliver Wyman, PWC, Deloitte and WDP while the company and founders were advised by EY Corporate Finance and Horten.
Debt and equity co-investment was provided by Arcmont and Riverside’s institutional LPs.