OPINION: The importance of cybersecurity in the financial services sector is being reflected in the growing number of related capital raisings and listings.
Security-minded technology investors are seeing a rise in the number of opportunities emerging on the ASX linked to Western Australia.
An early starter in the field was screening and verification service CVCheck, which raised $10 million and listed in 2015. It is now worth about $15 million.
More recently, John Van der Wielen-chaired Kyckr has listed after purchasing an Irish company that specialises in know-your-customer information services required for transaction compliance by banks worldwide. Like CVCheck, it has revenue and is reporting deals with major financial institutions such as Citibank.
Both Mr Van der Wielen and CVCheck’s Rod Sherwood returned to WA after significant careers in financial services in Europe. Mr Van der Wielen was coaxed out of a series of non-executive roles, including with private equity player The Blackstone Group, to head the state’s biggest health insurer, HBF. He has kept the Kyckr role with the blessing of his mutual organisation’s board and remains enthusiastic about the business’s future.
That’s probably not surprising. In order to frustrate money laundering and the funding of terror, new rules are regularly added to the checks required of banks and other financial institutions before they can do business with individuals and companies.
The increasingly fraught area of cybersecurity, intrinsically linked to the same criminals and terror groups as above, is also creating opportunities for local business. Even before May’s global WannaCry ransomware attack, there was growing momentum around this issue.
The recent reservation of public company name SC8 reflects fundraising plans for SC8 Technologies, a cybersecurity firm backed by John Poynton and Stewart Washer’s Jindalee Partners. It is understood to have links to Edith Cowan University, a major player in the cybersecurity space.
In June, ECU was named as one of two universities nationally that will share in $1.9 million of federal funding to boost its cybersecurity program.
As research funds go, that is not insignificant; but the real benefit is the recognition that the Joondalup institution’s 15-year focus on this field has made it a leader at a time when everyone is suddenly taking note. One might suggest it is yet another overnight success that took more than 10 years to develop.
In other corporate developments, US firm WhiteHawk is another moving into the listed space. WhiteHawk works to consolidate cybersecurity consulting services and provide a platform for customers to find them and the services they need.
Perth technology entrepreneur and investment banker Gavin Rezos played an advisory role, and WhiteHawk has conducted a round of fundraising in Australia ahead of a future plan to list here.
Mr Rezos said WhiteHawk raised $1 million in October and a further $2 million in March from high-net-worth investors, many in WA, as well as brokers in Australia and London, including some CIOs from large corporates as private investors.
WhiteHawk has used the money to build its platform and hire top staff, including Barack Obama’s former chief of cybersecurity, Trevor Rudolph.
The CEO is Terry Roberts, former second in command at US Naval Intelligence. The business plans to launch an IPO in late November.
Subiaco-based Secure2Go has scrapped its prospectus to raise funds and list. The business claims the market has changed, due to several positive developments, and it wants to go back to the drawing board. It has a number of devices to provide security for a range of typical assets, from boats and cars to digital watches.
CEO salaries
I have been fascinated to observe the furore surrounding CPA Australia CEO Alex Malley.
Mr Malley became the face of CPA Australia, through a career management self-help book and then a series of video interviews he did with various celebrities.
At the time, I was surprised that a brand would be so tightly wrapped around one person, particularly when they did not own the business; but from what I could see, it was working.
Clearly, some CPA members did not feel the same way. It is hard to tell if it was the lack of transparency around Mr Malley’s salary or just the fact that his apparent self-promotion was the core strategy to beef up the organisation’s membership, but those dissenters have pursued the board doggedly and created a crisis of governance.
While I am a big believer in transparency, ultimately the true test of a board is whether the strategy to grow members is right and whether it is successful. The pay ought to reflect the latter; the board’s performance ought to be viewed on the former.
