Permira acquiring control of BioCatch at $1.3 billion valuation
Permira acquiring control of BioCatch at $1.3 billion valuation
The Israeli startup, which developed a system for fraud detection and financial crime prevention powered by behavioral biometric intelligence, finished 2023 with 49% ARR growth, whilst also surpassing the $100 million ARR milestone and attaining EBITDA profitability
Israeli fraud detection startup BioCatch is being acquired by Permira Growth Opportunities II, a fund advised by global private equity firm Permira. The firm, headed in Israel by senior adviser Ran Maidan, will pay around $750 million for 60% of BioCatch, giving it a valuation of $1.3 billion.
Permira will primarily purchase shares from Bain Capital and Maverick Ventures, which bought their holdings in 2020 when the company was valued at approximately $300 million. Other shareholders, including venture capital funds Blumberg Capital and OurCrowd, have also received offers from Permira to sell their shares. Permira, which has 80 billion euros in assets under management, raised a new growth fund of $4 billion at the end of 2021 to increase its presence in the technology world.
Led by Maidan, Permira purchased a small stake in BioCatch a year ago when the fund acquired shares for $40 million at a value close to $1 billion. Last October, BioCatch became a unicorn in a secondary deal signed the day before October 7th at a value of $1 billion. In February, another secondary deal valued the company at slightly over $1 billion, in which Australia’s Macquarie Capital fund purchased shares for $32 million from existing investors. Now, Sapphire Ventures and Macquarie Capital, buyers in the last secondary rounds, are participating alongside Permira in purchasing shares from the old funds, albeit in smaller volumes. In total, BioCatch has raised $253 million to date. Bain Capital led a $145 million funding round in 2020 and will now sell most of its shares for three times the return on investment.
BioCatch, which developed a system for fraud detection and financial crime prevention powered by behavioral biometric intelligence, has experienced accelerated growth in recent times. The company was established in 2011 by Avi Turgeman and the late Benny Rosenbaum, with Gadi Mazor taking over as CEO in 2018. At that time, revenues were $7 million and the company was valued at $100 million. In 2023, BioCatch ultimately finished with 49% ARR growth, whilst also surpassing the $100 million ARR milestone and attaining EBITDA profitability. Today, BioCatch counts more than 190 financial institutions as customers globally, including over 30 of the world's largest 100 global banks.
Mazor, one of the biggest beneficiaries of the exit, stated that all BioCatch employees have options, and some will be exercisable in the deal with Permira. BioCatch employs 320 people, half of them in Israel, all of whom will receive a new allocation of options.
BioCatch has developed fraud and money laundering detection and prevention through behavioral biometrics, distinguishing between legitimate users of accounts and criminal elements. The company's algorithm monitors and analyzes digital behavior patterns based on 300 different parameters, including password typing speed and mouse-holding manner. According to the company, it has prevented losses of approximately $3.5 billion to date. BioCatch entered the financial crime prevention field in 2023, claiming to identify abnormal account activity in 98% of cases.
"The company will continue to operate in its current format and Gadi will continue to manage it," Maidan said. "We want to open up greater opportunities for the company. The intention is to help both with geographic expansion and through mergers and acquisitions that will expand the product." According to him, "the value is a correct value that makes it possible to take the company forward and develop it, and there are several exit strategies, including an IPO." Mazor added that he always built BioCatch for an IPO: "The very fact that we revealed our numbers shows the direction and thinking."
Following the transaction, BioCatch will become Permira’s most significant holding in Israel. Permira also controls Synamedia, formerly NDS. According to Maidan, the fund is now in the process of examining another investment in Israel, despite the war. "Permira's previous investments in Israel contributed to the fact that there is no fear of carrying out the BioCatch deal in the midst of the war," Maidan said. "Biokatch will continue to grow here, pay taxes here and we will not take it out of the country. As long as Israel continues to produce innovation and entrepreneurship that characterize it, and investors see that one plus one can make three, they will continue to invest here."
