Datasec Solutions eyeing two mergers ahead of 2H21 IPO

20 November 2020 - 09:05 am UTC

Adam Orlando

Datasec Solutions, the Australian privately held emerging diversified cyber security group, is actively assessing two potential mergers ahead of an initial public offering (IPO) in 12-18 months’ time, Director John Hannaford said.
 
The Melbourne-based firm will formally engage investment banks, as well as financial and legal advisors in the second half of 2021 for the Australian Securities Exchange (ASX) listing, he said on the sidelines of the JP Equity Partners 'Protecting our Future: Defence and Security' investor briefing in Perth on 19 November night.
 
Datasec “would love” to engage JP Equity Partners to assist on its IPO, Hannaford said, adding though no discussions have taken place yet.
 
Datasec develops, implements, and supports cyber security and information management end-point solutions with a view to solving critical security and compliance issues when organizations transmit private or business sensitive information. It is aggressively looking to expand, particularly into North America and Asia-Pacific. It sees growth opportunities in the working from home environment, as well as the virtual reality market, the director said.
 
The company is in talks with an undisclosed managed services company that is keen on merging with Datasec in which Datasec would provide additional security services capabilities. Datasec is also assessing a second merger with another firm that offers authentication technology, Hannaford said, without disclosing further details.
 
He did not disclose the value of the merger potential deals. However, the director noted that while the mergers will be at the smaller level, Datasec will also pursue strategic partnerships with larger global organizations that already have products in the market which it can help service their client base. He did not elaborate on the potential equity structure of any strategic partnership deal as it depends on the company and their respective technologies.
 
Datasec has a strategic partnership with HP, the American multinational information technology company headquartered in Palo Alto, California. Over the coming six months Datasec and HP will launch a new product that solves data security issues around printers connected to the internet. During this time, it will also launch another product with rf IDEAS that replaces swipe card technology, Hannaford said. Rf IDEAS is a global firm in the swipe card reader sector.
 
The company posted revenue of AUD 600,000 for the January-June period, with projections for that to grow to AUD 4m by the end of calendar year 2021, a company document said. 
 
The growth forecast is attributed to the global commercial agreement signed with HP in July for the rollout of its printer client-base, which has potential for 10m units to be rolled out. Its global commercial agreement with rf IDEAS has potential for 300m units to be rolled out. Also, Datasec’s managed services growth is poised to come from high demand for cyber services and is estimated to generate AUD 1.5m revenue by 2021, the company document said.
 
The Datasec group incorporates both Datasec Solutions, encryption and authentication software applications, and the MyEmpire cybersecurity managed services business. Datasec’s Cyrptix software is being applied to solve security problems in the office printer space with HP, and with mobile authentication solutions at rfIdeas. MyEmpire has growing revenues from its managed services from clients in Victoria, with massive growth opportunities projected in the sector, a company document said.
 
Hannaford is an experienced corporate financier and in 2005 he co-founded boutique corporate advisory firm Ventnor Capital, which specializes in corporate services to the junior resources sector. In 2016 he established View Street Partners, and he currently is a director at advisory firm Rockford Partners.
 
- by Adam Orlando in Perth