Boston Shop Expands Software Security Portfolio

Target: Radialpoint

Price: C$98 Million ($94.6 million)

Sponsor: TA Associates

Financial Adviser: Sponsor: Deloitte & Touche

Legal Adviser: Sponsor: Goodwin Procter LLP; Seller: Osler, Hoskin & Harcourt LLP

TA Associates boosted its bet on the software security market recently, investing C$98 million (U.S. $94.5 million) in Radialpoint, a Montreal-based company that provides security software to broadband service providers such as Verizon.

The Boston-based firm had been keeping its eye on Radialpoint for about five to six years before David Yang, an associate in TA Associates’s technology, media and telecom group, reached out to the company in late spring 2008. No investment bank was involved in the deal. TA Associates declined to characterize the size of the firm’s resulting stake in Radialpoint.

Hythem El-Nazer

, a TA Associates vice president, will join Radialpoint’s board of directors. According to El-Nazer, TA Associates plans to expand Radialpoint via add-on acquisitions and with the introduction of new products and services. El-Nazer declined to discus the company’s financials, but said its revenue has been growing 30 percent annually for the last several years.

The investment comes from two equity funds. They are TA X LP, a $3.5 billion fund raised in 2006, and TA Atlantic & Pacific VI LP, a $1.75 billion fund raised from non-U.S. investors and closed in November 2007. The firm also suppled subordinated debt on the deal, using money from its TA Subordinated Debt Fund II LP, a $777.5 million vehicle closed in March 2006.

Radialpoint’s desktop security products include anti-virus, anti-spyware, firewall, privacy manager, fraud protection, parental controls, and pop-up blocker features. Its customers include broadband carriers such as Verizon, Virgin Media, Bell Canada and TELUS Corp.

The investment falls within two markets that TA Associates knows a good deal about—telecommunications and software. Also within sofware security the firm has backed AXENT Technologies, which TA Associates sold to Symantec Corp. in 2000 as part of a $930 million deal; McAfee Inc., and Sophos Plc.