Investcorp sells Avira, nets 200% IRR

The sale has generated returns of more than 2x money and IRR of 200%. The deal is set to complete in Q1 2021.

“We invested in April but had been in discussions with Avira since 2019, so we knew the management team and founder well,” Gilbert Kamieniecky, managing director and head of technology private equity at Investcorp, told Unquote. “We wanted to make a consolidation and growth strategy, and the business has outperformed over the first few months, doing significantly better than our expectation.”

Asked about the rationale behind the timing of the exit, Kamieniecky said: “We had an approach from Norton and they were one of the logical buyers for the company, and it is the right step forward. This exit came earlier than expected, but given the performance and Norton’s vision, we were happy with this, as were the management team and founder.”

The company’s EBITDA, whch was €15m at the time of Investcorp's initial investment, rose by 80% during the investment period. Avira also saw its revenues increase significantly.

During the investment period, Avira made one add-on acquisition, taking a small financing line from local German banks.

The buyout in April 2020 was not leveraged, as reported by Unquote sister publication Debtwire. The GP did not refinance the business, Kamieniecky said, facilitating a smooth investment and exit process. “As we made an all-equity investment, we were able to move fast on both the way in and the way out, helping us to execute both deals in this environment.”

Investcorp invested in Avira via Investcorp Technology Partners Fund IV, which held a final close on $400m in December 2018. The fund generally deploys equity tickets of $25-50m and has made seven platform investments; Avira is the first of these to be sold.

“We are managing an active portfolio of seven companies in Tech Fund IV, which we started deploying from 2016 onwards,” says Kamieniecky. The fund’s portfolio of technology-backed companies have performed well during the economic crisis brought about by the coronavirus pandemic, he added. “The companies are all performing well and have all seen increases in valuation and financials since the beginning of this year. We have received inbounds for some other companies that are performing well, but are not planning any exits in the short term."

Investcorp’s fourth fund is now 70% deployed and the GP intends to make further investments from the fund. The firm has a good pipeline of investment opportunities, Kamieniecky said. “We usually have two to six months of exclusivity before we make our deals. We mostly deal with founder-owned companies, so our deals come down to relationship with the founders and the strategic alignment with them.”

Company
Founded in 1986 and based in Tettnang, Baden-Württemberg, Avira provides security and privacy software for computers, smartphones, home networks and smart devices. The business generated revenues of around €70m at the time of Investcorp’s investment in April 2020.

People
Investcorp – Gilbert Kamieniecky (managing director, head of technology private equity).
Avira – Travis Witteveen (CEO).
NortonLifeLock – Vincent Pilette (CEO).

Advisers
Vendor – Proskauer (legal); McDermott Will & Emery (legal).

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