Teddy Sagi's KAPE execs exercise options worth £13.3m

Ido Erlichman Photo: Sharon Deri
Ido Erlichman Photo: Sharon Deri

Controlling shareholder Teddy Sagi has bought the shares, rewarding KAPE's management team for increasing the company's market cap tenfold.

Israeli businessman Teddy Sagi is ensuring that his executives at KAPE Technologies plc (LSE: KAPE) maintain a strong drive to strive for continued growth. KAPE's executives are exercising half of their options for the shares they were granted when joining the company, and have sold shares for £13.3 million (about NIS 60 million). The company's controlling shareholder, businessman Teddy Sagi, has bought the shares in a deal outside of the London Stock Exchange and increased his stake in the company. The executives are CEO Ido Erlichman, CFO Moran Laufer, COO Daniel Sagi and several other executives who are not bound by reporting requirements.

KAPE specializes in encrypting digital data and solutions to help organisations and consumers to protect their digital security and privacy. The company is headquartered in London and traded on the London Stock Exchange. KAPE is considered one of the leading companies in digital privacy protection in the US with more than 2.5 million paying subscribers worldwide, about half of them in North America. The company operates in 160 countries and has 350 employees in the UK and US, among other things, under the brand Private Internet Access (PIA).

KAPE held its IPO on the London Stock Exchange at the end of 2014 at a price of £1.03. After undergoing a business challenge, which saw its share price fall to just £0.24.5 by mid-2016, The board appointed new management team headed by Erlichman to drive the turnaround and execute on a new strategy. Erlichman, together with the management team and the support of the board and investors, and due to the increased risk in digital privacy and securing digital information, changed the focus of the company into developing software that allowed enterprises and consumers worldwide to control and to protect their digital data based on a Software as a Service (SaaS) business model.

In 2017, the new management led the acquisition of CyberGhost, a digital encryption company, which since its purchase increased its customer base by more than 400%. In the second half of 2018, the company acquired Intego, a US end-point security company and at the end of 2019, KAPE merged an US company LTMI, which holds the Private internet Access (PIA) brand, in an overall deal worth $127.6 million, making KAPE one of the world's three major players in privacy protection.

The measures taken by the management team brought very positive results and gave the company major credibility on the stock exchange and wide support from institutional investors. Within four years, KAPE's market cap soared and is currently about $400 million, compared with $40 million before the strategic change. The company's share price has jumped almost tenfold (from £0.24 in mid-2016 to about £2.00, the price of the deal today).

As part of the deal between the management team and Sagi, Sagi has acquired half of the options held by the executives: about 6.6 million of the company's shares for £13.3 million and increased his stake in the company to 67.65% of the share equity currently issued by the company). From the point of view of Erlichman and the other executives, this is the first time they have exercised their options since assuming their management positions.

Sources close to Sagi explain that there were two reasons for the share purchase. The first is a vote of confidence in the company's future, and in the potential it contains as a leading player in the field of cybersecurity and privacy. In addition, Sagi is interested in seeing his management team continuing to lead the company in the coming years and will continue incentivizing them. The team will be able to realize the major value that they have brought investors and thus be able to enjoy the fruits that they have produced. The executives will continue to hold a similar amount of options, so that their interest will be to continue striving to promote the company.

Erlichman said, "The current deal is only a milestone on the company's journey. We have many plans to promote in the coming years, and this is only the start."

Published by Globes, Israel business news - en.globes.co.il - on June 1, 2020

© Copyright of Globes Publisher Itonut (1983) Ltd. 2020

Ido Erlichman Photo: Sharon Deri
Ido Erlichman Photo: Sharon Deri
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