Private equity giant The Carlyle Group has offloaded its controlling equity stake in privately held network security solutions provider Cyberoam Technologies to the UK-based Sophos Group, according to a press release.
Financial details of the transaction have not been revealed, but media reports recently suggested that the PE firm has made around 5x returns over its seven-year-old investment in Cyberoam. Last month, Carlyle also sold its entire stake in Tirumala Milk Products to Lactalis, generating a three-fold return on its investment in the company.
Carlyle had initially acquired around 60 per cent stake in Ahmedabad-based Elitecore Technologies, the parent company of Cyberoam, for around Rs 43 crore ($10.3 million then) and later hiked its stake in the firm to 87.5 per cent with additional investment.
Later in 2012, the network security business of the company was spun out to form Cyberoam, with Carlyle holding majority stake and Hemal Patel, the erstwhile promoter of Elitecore, owning the rest.
"We are extremely happy to have partnered with Carlyle, which has provided strategic support and direction to the business and assisted in the fast growth of the company. Cyberoam and Sophos complement each other in many ways in a fast-growing network security market. Joining forces will allow us to offer more product innovation and value to our customers and channel," Patel said in the release.
Cyberoam's revenue rose over six times, while its profits went up around four times during Carlyle's investment, the statement stated.
J. Sagar Associates (JSA) advised Carlyle Group & the management shareholders of Cyberoam on this deal.
Presently, Cyberoam has global presence spanning across 125 countries with offices in America, Middle East and India, along with R&D and global support management centres in India. The company has 450 employees.
Sophos is into antivirus and encryption products and has been in the business for nearly three decades. Today its products are used to secure the networks used by 100 million people in 150 countries and 100,000 businesses, including Pixar, Under Armour, Northrop Grumman, Xerox, Ford, Avis and Toshiba.
Sophos itself is backed by private equity firm Apax Partners, which had invested $580 million in the company to acquire a 70 per cent stake in early 2010. Following the equity infusion by Apax, Sophos bought out the world's fourth-largest UTM appliance vendor Astaro in 2011.
With over 156 billion equity capital under its management, Carlyle had injected $1 billion from its Asian Growth fund in over a dozen companies in India. The Indian portfolio companies of the PE firm include Edelweiss Financial Services, IIFL, Allsec Technologies and Repco Home Finance.
(Edited by Joby Puthuparampil Johnson)