Argus investors, employees win big in $430m. acquisition

The Argus Cyber Security exit is one of the most profitable for investors in the Israeli auto-tech sector and hi-tech, in general, in recent years, according to figures obtained by Globes – the equivalent of $430 million. The final deal was signed in euros. Of this amount, $50m., which was allocated to bonuses for managers and employees, will be spread over a number of years. The remaining $380m. will go to the company’s entrepreneurs and shareholders.

Taking into account the fact that $30m. has been invested in the company since it was founded in 2014, the investors are receiving $12.60 for each dollar invested in a span of just two years.

The company raised just $4m. in its first financing round in April 2014; investors in this round included Magma Venture Partners, Vertex Venture Capital, Zohar Zisapel and a number of auto importers, one of whom was Gil Agmon, who subsequently joined Argus’s advisory board.

Argus held its main financing round in September 2015 when it raised $26m. led by systems provider Magna International, which incidentally is one of Argus’s main international competitors; Continental; German insurance company Allianz SE; and Japanese financial corporation SBI.

The company’s core investors also participated in the round, including Zisapel, entrepreneur Eyal Gur and Magma and Vertex.

Cyber-sector sources said Allianz was a candidate for additional strategic deals in the sector. In an article published this month in Germany, senior Alliance figures cited cybersecurity as strategic, and essential for advancement in the smart-car segment.

Argus has ongoing cooperation in cyber security for vehicles, which began in 2016. It is not clear what will happen to this partnership, but sources in the sector believe that Check Point Software Technologies Ltd. is likely to consider entering the cybersecurity-for-vehicles sector independently through an acquisition of existing players or by investing in the field itself.

There is still strong demand in the global auto industry for companies in the cybersecurity-for-vehicles sector in view of the current campaign by regulators in the US and Europe to require the installation of cyber protection in vehicles and vehicle components.

Argus stated: “Things remain as they were before, and we are honoring every agreement with every customer and partner. The acquiring company is Elektrobit, a subsidiary of Continental, which independently supplies and develops components, and is a services contractor with customers throughout the auto industry, not just Continental, its parent company.”

The company declined to respond to the figures published in the report.