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Security Firm Appgate To Go Public At $1B Valuation Via Merger

Becoming publicly traded just a year after its formation by merging with a shell company will allow secure access vendor Appgate to accelerate its growth, scale and go-to-market strategies, the company said.

Secure access vendor Appgate plans to go public at a $1 billion valuation just a year after its formation by merging with a shell company.

Coral Gables, Fla.-based Appgate said becoming a publicly traded company will provide quick access to significant financial resources to accelerate growth, scale and go-to-market strategies. Appgate was spun out from data center vendor Cyxtera in January 2020, and expects to generate revenues of $40 million this year with a compound annual growth rate (CAGR) of 50 percent over the next half-decade.

“As a public company, we will be able to continue to innovate, stay ahead of emerging security threats, and accelerate our revenue growth,” Appgate Executive Chairman Manny Medina said in a statement. “All of that enables our customers, both private and public, to operate securely and with peace of mind.”

[Related: Cyxtera To Spin Out Cybersecurity Practice Into Standalone Company]

Appgate expects to be listed on either the Nasdaq Stock Market or New York Stock Exchange in the springtime once its merger is complete with publicly traded shell company Newtown Lane Marketing, led by New York Islanders Co-Owner Jon Ledecky. Ledecky is expected to join Appgate’s board, while existing Appgate owners BC Partners and Medina Capital will hold 74.4 percent of the company’s stock.

As part of the transaction, a leading alternative investment manager is also investing $100 million in Appgate at a $1 billion post-money valuation. Newtown Lane and the alternative asset manager will each hold 9.3 percent stakes in Appgate, while Appgate’s management pool will hold a 7 percent stake in the company.

Appgate has more than 360 employees and serves over 650 businesses, including Fifth Third Bank, Norwegian Cruise Lines, Secureworks, Rackspace and Weight Watchers. In the federal government space, Appgate said it supports the U.S. Department of Defense and U.S. Department of Homeland Security.

“As a result of this transaction, Appgate will intensify its efforts … bring an enhanced focus to helping protect enterprise and government information systems from today’s emerging threats, and act with precision and agility in a rapidly changing market,” BC Partners partner Fahim Ahmed said in a statement.

In its brief existence, Appgate has already gone through one CEO transition. Appgate’s founding CEO was Mike Aiello, formerly director of product management for Google Cloud Platform Security, but Aiello left the company in June. Barry Field, who previously served as Appgate and Cyxtera’s chief revenue officer, stepped into the CEO role upon Aiello’s departure.

“This is a tremendous time of growth in our industry,” Field said in a statement. “Appgate is displacing outdated, easily compromised traditional network security, such as VPNs and firewalls, by using cutting-edge software designed around the principles of zero trust.”

Appgate has over the past year increased its share of business flowing through the channel from 20 percent to 40 percent, according to the 2021 CRN Channel Chiefs profile for Tina Gravel, SVP of global channels and alliances. The company also rolled out a new partner program that rewards the channel not only with commissions and margins but also for learning about Appgate’s product differentiators.

Forrester last summer named Appgate as a leading Zero Trust eXtended Ecosystem Platform Provider alongside Akamai, Cisco Systems, Illumio, MobileIron (since acquired by Ivanti) and Palo Alto Networks. As a zero trust provider, Appgate said it grants least-privileged access to the network by default and strictly enforces access controls for everyone from everywhere.

Appgate’s secure access offerings include software defined perimeter (SDP), risk-based authentication, digital threat protection, and offense-oriented professional services, according to the company. Appgate said its software creates a secure network perimeter around each user, reduces the need for costly legacy hardware, and can be deployed in days or weeks rather than months or years.

“We have spent the past several years searching for an outstanding merger candidate for Newtown,” Ledecky said in a statement. “In Appgate, we have found an exceptional company led by a proven, world-class management team.”

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