Target Company Information

HWG Sababa S.r.l., founded in 2008 and headquartered in Verona, Italy, is a prominent independent provider of comprehensive cybersecurity solutions in Southern Europe. The Company specializes in security operations center solutions for IT, IoT, and operational technology (OT) environments, catering to mid-sized enterprises across various sectors including critical infrastructure, energy, finance, and manufacturing. Under the stewardship of Investcorp Technology Partners Fund V since 2022, HWG Sababa has seen significant growth, achieving a sixfold increase in revenue and completing four strategic acquisitions, notably the acquisition of Sababa Security S.p.A. in 2023.

Industry Overview

The cybersecurity landscape in Italy has been experiencing robust growth, propelled by increasing digitalization across various industries and an uptick in cyber threats. With the Italian government taking significant measures to reinforce cybersecurity frameworks, businesses are now mandated to invest in defensive technologies, which is fostering expansion in the sector. The demand for sophisticated cybersecurity solutions has led to a surge in both domestic and international investments aimed at enhancing capabilities against evolving cyber risks.

Moreover, Southern Europe is witnessing a heightened awareness of cybersecurity importance among organizations, leading to a greater push for comprehensive solutions. HWG Sababa’s strong portfolio positions it well within this competitive market, as enterprises seek reliable partners to safeguard their digital infrastructures. Industry reports indicate a steady increase in spending on cybersecurity services and technologies as organizations look to mitigate risks and protect sensitive information.

As businesses continue to grapple with complex cybersecurity challenges, the drive towards innovation in security solutions is paramount. The Italian cybersecurity market is adapting to increasingly sophisticated threats, thus enabling companies like HWG Sababa to boost their service offerings and expand their market reach. This change is steering a favorable environment for organic growth and acquisitions in this vital sector.

With a focus on the internationalization of services, HWG Sababa is poised to play a significant role in addressing the growing cybersecurity needs not just in Italy, but also in the wider European and Middle Eastern markets, capitalizing on its strong operational foundations.

The Rationale Behind the Deal

The decision to establish a continuation fund for HWG Sababa was driven by the strong performance exhibited by the Company since Investcorp's initial investment. This move allows existing investors to realize robust returns while simultaneously positioning the fund and its contributors to harness the high potential for further value creation within the cybersecurity space. Maintaining a significant stake in the Company, the management team also showcases their confidence in HWG Sababa's growth trajectory and market leadership.

This strategic sale aligns with Investcorp’s commitment to fostering technological advancement and enhancing the Company’s capabilities in a rapidly evolving cybersecurity landscape. By pooling resources in the continuation fund, HWG Sababa aims to accelerate its strategic initiatives and expand its operational capabilities, particularly in Operational Technology, technology innovation, and geographical expansion.

Investor Information

Investcorp is a renowned global alternative investment firm, focusing on various assets, including private equity, real estate, and credit. The firm manages substantial funds and has a proven track record of facilitating growth in companies within its portfolio. The establishment of the continuation fund for HWG Sababa is managed by Investcorp and reflects the firm’s expertise in identifying high-performing assets with significant upside potential.

With anchor investments from influential partners such as Hayfin Capital Management and Coller Capital, the fund is strategically poised to support HWG Sababa's continued expansion. This collaboration showcases Investcorp's ability to attract and work alongside prominent partners, enhancing the Company's growth strategy while ensuring favorable returns for investors.

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The establishment of the continuation fund for HWG Sababa appears to be a sound investment strategy, leveraging the existing growth momentum within the cybersecurity sector. Investcorp's confidence in the Company, substantiated by its remarkable revenue growth and strategic acquisitions, indicates that the continuation fund is well-positioned to drive further expansion. The collaboration with notable financial partners further strengthens its investment proposition.

Furthermore, the transition to a continuation fund allows for a more focused strategy, with a clear objective of enhancing HWG Sababa's service offerings and geographical footprint. As businesses increasingly prioritize cybersecurity measures, the demand for robust cybersecurity solutions is likely to continue thriving, providing significant opportunities for continued growth.

The experienced management team at HWG Sababa, along with committed investors, signals strong prospects for future profitability and market leadership. Their strategy aligns well with prevailing industry trends, affirming the positive outlook on this investment and the potential for lucrative returns.

In conclusion, the continuation fund for HWG Sababa is indicative of a well-thought-out investment that is set to capitalize on a burgeoning cybersecurity market. Continued backing from Investcorp, coupled with a solid operational strategy, underscores both the immediate and long-term viability of this investment.

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