Login
iscover
Canberra-based cyber security company archTIS has confirmed it has secured binding commitments with respect to a placement to raise gross proceeds of approximately $8.4 million. MST Financial and amicaa acted as joint lead managers to the placement.
To continue reading the rest of this article, please log in.
Create free account to get unlimited news articles and more!
The placement comprises 25,454,545 million archTIS shares to be issued at $0.33 per share. The placement will be completed using archTIS’ existing placement capacity under ASX Listing Rule 7.1.
ArchTIS CEO Daniel Lai welcomed the announcement, telling Defence Connect, "This represents a truly transformative acquisition for archTIS because it signals our entry into the US market and opens us up to a significantly greater addressable market that encompasses Nucleus Cyber's key global sales and distribution channels through Microsoft."
The issue price of $0.33 per share represents a 15.0 per cent and 13.7 per cent discount to the volume weighted average price over the last five and 10 trading days, respectively, prior to 10 November 2020. Funds raised will be used to:
- Accelerate sales and marketing across the combined archTIS and Nucleus Cyber businesses, including cross-selling Attribute Based Access Control into the global Microsoft channel opportunity;
- Leverage the US Nucleus Cyber team to market Kojensi into the North American market;
- Further execute the technology roadmap for Kojensi and NC Protect relative to customer requirements;
- Commercialise new products, including DataKloak, to protect Big Data from unauthorised access; and
- Invest in Nucleus Cyber.
This capital raise follows the recently announced acquisition agreement between archTIS and global information protection business Nucleus Cyber for a total potential consideration of up to $9.75 million in archTIS shares.
"The acquisition comes at a time of both reinvigorated and increased spending on Australian defence and sovereign information security capabilities in the face of heightened geopolitical and economic uncertainty. Scott Morrison sent an important message to the nation over the last few months by investing over $1.6 billion in bolstering Australia's cyber readiness and information warfare capabilities and $273 billion in Defence capability uplift," Lai added.
This is a transformational acquisition that leverages archTIS' core capabilities, expands its offering into the Microsoft product suite and creates new sales and distribution channels globally. The newly expanded product offering creates increased revenue diversity, scale, and a platform for accelerated growth that is expected to generate cross-selling opportunities between the client bases.
Nucleus Cyber recorded $819,000 annual recurring revenue in FY20 at over 130 per cent year on year growth from its high-margin, annual subscription-based software platform across a wide range of sectors including government and defence, financial services, healthcare, pharmaceuticals, energy and manufacturing.
Lai said, "The acquisition of Nucleus Cyber, who is a Microsoft, Dropbox and Nutanix partner, allows archTIS to establish our core presence in the US as we accelerate our growth path. This is a local success story of an Australian cyber company taking advantage of the geopolitical and economic tailwinds, expanding into US and taking advantage of an acute demand for premium sovereign defence and cyber security capabilities worldwide."
The recent co-sell agreement with Microsoft provides a gateway for easy integration into the world’s largest provider of digital collaboration business products.
Microsoft will actively promote and sell Nucleus Cyber Protect product throughout the Microsoft field sales and channel resellers. The acquisition of Nucleus Cyber offers unique opportunities for growth across Microsoft’s Teams, Office 365, SharePoint and Exchange products globally both on premise and in the cloud. The funding raised will help accelerate these opportunities.
Completion of the transaction remains subject to finalisation of standard documentation and shareholder approval and is expected before the end of calendar year 2020.
"The company continues to deliver value to shareholders and now, following the successful completion of this capital raise, it has the runway needed to proceed with a full technology roadmap for Kojensi and NC Protect as well as the commercialisation of exciting new products like DataKloak," Lai said.
Stephen Kuper
Steve has an extensive career across government, defence industry and advocacy, having previously worked for cabinet ministers at both Federal and State levels.
