Sophos floats on London Stock Exchange with £1bn-plus valuation

Apax Partners and co-founders Jan Hruska and Peter Lammer double their money as British anti-virus software company makes successful stock exchange debut

Sophos, the British security software company, has successfully floated on the London Stock Exchange (LSE), achieving a valuation of more than £1bn - well short of hopes of a £1.5bn valuation, but a successful market flotation nevertheless.

The company debuted on Friday and also raised £125m at the same time. The share offering will also have provided its private equity backers, Apax Partners, who acquired a 70 per cent stake in the company in May 2010 for £372m, with a tidy profit. The company now trades under the tag "SOPH". Sophos hired boutique investment bank Moelis & Company at the beginning of the year to handle the flotation.

Analysts have been particularly positive about Sophos's prospects, especially as it will now join the company of Sage Software and ARM Holdings in the tech sector of the LSE.

"Cyber security is a particularly hot topic right now. Sophos has a particular niche in SMEs. Much talk about the valuation. But if you think it's high, take a look at competitors like Baracuda, Palo Alto et al.

"The issue comes down to growth. How do you value a solid, well run, profitable company with good prospects against new upstarts with high growth (at the moment...) but no profits? We seem to face this dilemma all the time! But Boring old Holway still loves profits and cash," commented Richard Holway himself, founder and chairman of IT analyst group TechMarketView.

Sophos was founded in 1985 by Jan Hruska and Peter Lammer, who were students at the time. They stepped down as joint CEOs in 2005, and sold their majority stakes to Apax Partners in 2010, after attempting share flotations in 2007 and 2009. Both founders have retained a place on Sophos's board and a minority share stake.