Covata sets sights on US after Australian IPO

TPG-backed Australian data security company Covata is setting its sights on the US market after listing on the ASX in an oversubscribed AU$15 million share offering following its reverse takeover of Prime Minerals.

Australian data security software firm Covata has listed on the Australian Securities Exchange (ASX) after raising an oversubscribed share offer of AU$15 million — well beyond its initial AU$5 million target.

The company is dual-headquartered in Sydney and Reston, Virginia — just outside of Washington, DC — where many of its clients reside, and now holds a market capitalisation of AU$76 million.

Australian telecommunications giant TPG holds a 15 percent stake in Covata, after investing AU$10 million into a private capital-raising round. It also played a part in the IPO, and is set to remain the largest shareholder.

In March last year, TPG and former Covata parent company Cocoon Data Holdings announced a technical partnership along with an investment agreement, which TPG said at the time would offer unique, industry-leading solutions for thousands of its customers wishing to ensure privacy in the controls and protection available through the integration of Covata's "Secure Objects" technology into customer services.

"Using this technology, we aim to create and deliver military-grade security solutions for our residential and business customers," TPG consumer general manager Craig Levy said at the time.

Today's public listing comes five months after the company, which previously traded as a subsidiary of Cocoon Data, signed an AU$57 million acquisition deal with failed ASX-listed uranium mining company Prime Minerals in a reverse-takeover manoeuvre, allowing a backdoor listing on the exchange.

Covata, a portmanteau of covert and data, was originally spun out of Sydney's Cocoon Data Holdings, which will now operate as a subsidiary under its publicly listed offspring.

The company has distribution agreements signed in Europe, the Middle East, and Africa. According to a presentation (PDF) shown to Prime Minerals shareholders in May, it is also working on strategic partners in North America.

Covata shareholders were told in a statement that not only will the public listing allow the company to enhance its market credibility, but it would also position it well to boost its commercialisation strategy in a bid to grow globally.

"We are delighted to list on the ASX, and particularly pleased with the strong level of investor interest that resulted in the equity offering oversubscribed," said Covata CEO and founder Trent Telford. "With our unique, patented security solution, we have the opportunity to modernise the way large enterprises secure their most important assets — their data — from hackers and intruders looking to benefit from stolen information."

In June, Telford said in a blog post that he would move to the US to take a full-time role in helping the company expand in North America. He will be joining Charles "Chuck" Archer, Covata executive chairman and former assistant director of the US Federal Bureau of Investigations, in driving the company's growth in the country.

"Being in the US will allow me to interact daily with our prospects, customers, and partners, so we can shape the product direction to address their specific requirements," said Telford.

In July, Archer told ZDNet that Covata claimed a number of customers in the US government and military sectors, but was also focusing on expanding its presence in the country's financial services sector.

"We intend to do more government business," he said. "We would tend to be a subcontractor to an established prime, like Lockheed-Martin or Northrop Grumman, somebody who has a series of ongoing contracts or professional services arrangements.

"[But] we think our highest priority ought to be in financial management," he said.

Covata's backdoor public listing is just one in a series of local tech companies that have recently moved to list on the ASX via a reverse takover. In October last year, Bulletproof announced that it was conducting a reverse takeover of Spencer Resources Limited.

At the end of April this year, Australian enterprise cloud services provider PRM Cloud Solutions mounted a reverse takeover of ASX-listed mining exploration company Minerals Corporation.