PwC sets up confidential auction for defence cyber firm Penten

Brought in as a sell-side adviser, PwC has initiated a “confidential two-part auction” for a stake in Australian defence and government cyber contractor Penten.

Professional services firm PwC has been pushing defence and government cybersecurity contractor Penten to potential investors in what the Australian Financial Review (AFR) describes as a confidential two-part auction. According to the publication, prospective buyers have been told that Penten is forecasting revenues of $35 million for the current financial year, an 80 percent jump on 2020 figures to continue a four-year growth rate.

Co-founded in 2014 by former Australian Army officer Ben Whitham and led by CEO Matthew Wilson – an EY Entrepreneur of the Year award-winner in 2019 – the Canberra-based cyber specialist has achieved steep, consistent growth in each year of operation to a headcount of 120 today. The firm’s software and hardware solutions cover three main lines; Secure Mobility, Applied AI, and tactical Communications Security.

Whitham and Wilson’s previous cyber start-up M5 Network Security was sold to Northrop Grumman for an undisclosed sum in 2012, and, according to a PwC ‘teaser’ document seen by the AFR, private equity players have been informed that a controlling stake of Penten could be up for grabs should a suitable offer be made. Outwardly, the company is seeking a “partner to enhance their ability to capture all of its significant growth potential.”

Investors have also been apprised of a $70 million contract pipeline, and a valuation ballpark of $100 million when PwC first came on board as an adviser late last year – a figure which has ballooned in expectations to a possible $200 million since, with a number of buyout firms believed to be interested. However, the suitability of any bids arising from the first phase of the auction won’t be assessed on financials alone.

With Penten serving the Department of Defence and other Australian government agencies in highly sensitive domains, any keen financiers or larger parents are certain to be subjected to heavy screening and be likely required to accept a range of other sales criteria. The AFR reports that first-round bids for the company were due last week.

Another industry player, CyberCX, was formed in 2019 with the backing of private equity firm BGH Capital.

In 2018, Penten was named Australian Business of the Year at the Telstra Business Awards. “We are lucky enough to work with some of the most talented cyber security professionals in Australia and the world working on some of the hardest cyber problems facing the nation,” Wilson said at the time.“I’m excited that Telstra has given us a platform to talk about the world-leading cyber security technologies we’re creating.”