Cambridge, Ont.-based cybersecurity company eSentire, Inc. is the latest Canadian technology company to top a US$1-billion valuation after majority shareholder Warburg Pincus LLC sold some of its stake to a pair of Canadian investors.
The Caisse de dépôt et placement du Québec and existing eSentire shareholder Georgian, the Toronto private capital giant, have bought a US$325-million stake in the company, with most of that going to buy shares owned by Warburg as well as early investors.
The deal will see Warburg’s ownership stake in eSentire shrink from roughly three-quarters to just over half, while Georgian and the Caisse, one of Canada’s largest pension fund managers, will collectively own 35 per cent. More than US$100-million of the investment is going to eSentire’s treasury in the deal, which values the company at US$1.1-billion prior to the receipt of funds.
The existence of the deal was first reported by Bloomberg, and further details were confirmed Thursday by two sources familiar with the matter. The Globe and Mail is not disclosing the identities of the sources as they are not authorized to discuss the matter.
eSentire is one of the breakout success stories of the post-BlackBerry Waterloo, Ont., region. It generates more than US$80-million in annual revenue and has been growing by about 35 per cent per year. The company serves more than 1,000 enterprise customers in 70-plus countries.
The 21-year-old company, with about 520 employees, provides technology that helps corporate security operations teams protect critical applications from cyber attacks by using a combination of algorithms and human analysis to find and mitigate security breaches before they disrupt operations.
One of eSentire’s top competitors is Arctic Wolf Networks, which is based in Eden Prairie, Minn., but was conceived during a conversation between the founders years ago in Kitchener, Ont., Arctic Wolf CEO Brian NeSmith has said. The company is not only a rival for eSentire in the marketplace but also for talent, as half its staff, including its whole research and development operation, is in the Kitchener-Waterloo region.
ESentire also competes with Mandiant Inc., formerly known as FireEye. Bloomberg has reported Microsoft is in talks to buy that Virginia company.
Georgian bought into eSentire in 2014 and invested again in 2016 as part of a US$19.5-million venture capital deal led by Edison Partners and backed by Cisco Investments, Northleaf Ventures Catalyst Fund and Information Venture Partners. A year later, Warburg bought into eSentire for an undisclosed amount. Warburg, Edison and Georgian all participated in a US$47-million funding round by eSentire in 2019.
eSentire is led by chief executive officer Kerry Bailey, who joined the company four years ago after serving as senior vice-president and general manager of cloud at Hewlett Packard Enterprise. He replaced J. Paul Haynes, who is now president and chief operating officer.
Spokespeople for eSentire and Georgian declined to comment.
Be smart with your money. Get the latest investing insights delivered right to your inbox three times a week, with the Globe Investor newsletter. Sign up today.
Sean Silcoff