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BioCatch nets returns for Bain Capital, Maverick at $1.3b valuation

Illustration of fingerprint patterns with a tracking target on the middle print.

Illustration: Eniola Odetunde/Axios

Permira acquired a majority stake in Israeli fraud detection company BioCatch, valuing the company at $1.3 billion.

Why it matters: The deal represents significant returns for investors including Bain Capital and Maverick in a slow exit market.

Catch up quick: Bain first invested in the company in 2020, valuing the business around $400 million, Bain partner Dewey Awad tells Axios. It gradually added to that stake, taking around 35% of the business.

  • The deal represents a 3x return for Bain, a source with knowledge of the matters tells Axios.
  • Founded in 2011, the company was also backed by Maverick Ventures, which first invested in 2018, when BioCatch was valued at about $100 million.
  • BioCatch hit unicorn status last fall, with an investment from Sapphire Ventures.

The latest: Some angels — who invested when BioCatch was valued around $20 million to $30 million — also sold to Permira in this round, says CEO Gadi Mazor.

  • Macquarie and Sapphire acquired secondaries in the company last year, and again in this round.

By the numbers: As of Q3 2023, BioCatch was generating $100 million in annual recurring revenue. BioCatch is also EBITDA profitable and cash-flow positive.

What they're saying: "Between Permira, Sapphire, and Maquarie (investing) in last six months, we have a cap table that looks to support from $1.3 billion to 3x or 10x that," Mazor says.

Context: The deal comes at a time developments in AI are resulting in a boom in fraud — and fraud detection businesses are expected to fight back using the same technology.

Zoom in: BioCatch is also eyeing potential acquisitions, bolstering its chops in that space as well.

  • "I do think there is going to be a lot of consolidation," Mazor says, pointing to the fragmented ecosystem. "You have behavioral biometrics, transaction monitoring, orchestration and authentication — and big banks have to put together how those puzzle pieces work."

State of play: Socure acquired Berbix last year for about $70 million. Feedzai acquired Revelock in 2021. Entrust agreed to acquire Onfido this year.

  • Permira, which has a strong presence in Europe, is also expected to help the company expand there.
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