By Eric Auchard
FRANKFURT (Reuters) - A venture capital fund advised by former British and U.S. intelligence officials is planning a string of acquisitions to create a pan-European cyber security specialist.
C5 Capital aims to create a regional managed security service leader combining the latest cloud-based cyber defenses, high levels of automation and local regulatory knowledge, two of the fund's partners said in joint phone interview on Thursday.
"We have a pipeline of six to eight acquisitions we plan to do across Europe," C5 Chairman and partner Andre Pienaar, a former head of risk management firm Kroll's African and Natural Resources business, told Reuters.
C5 is advised by a strategy board including the recent heads of GCHQ and British Special Forces, the former chairman of the U.S. Joint Chiefs of Staff and a former top NSA official.
Its strategy is to build the business around ITC Secure Networking, which C5 acquired for 24 million pounds ($34 million) in 2016.
ITC offers a security operations center platform for delivering managed security services to companies big and small. C5 is tapping its 100 million pound fund to expand ITC, but also said it has access to larger pools of capital from co-investors.
"C5 is a very long way down the track with our first cyber security acquisition in Germany," Daniel Freeman, C5's chief investment officer said, without giving detailing.
"We want to gain ground in the key markets this year. The German market is the center of the chessboard."
London-based ITC serves FTSE 100 clients British American Tobacco, ABInBev, BT and Orange, major financial services firms and Britain's Financial Conduct Authority (FCA).
Freeman, a former investment banker at Lehman Brothers and fund manager at Deutsche Bank and Eton Park, said it was also targeting security firms in the Benelux and Nordic regions.
"We have a number of acquisition conversations underway," he said, adding that building a regional leader in managed security services was likely to take three to four years. "Europe is a market where being local is very important".
In parallel, C5 has taken minority investment stakes in five state-of-the-art cyber technology providers to develop its own intellectual property, rather than rolling up undifferentiated managed services to gain scale, Freeman said.
The firm has invested in UK sensor company Metrasens, Anglo-Danish identity and access management provider Omada, and Reduxio, an Israeli-U.S. maker of hybrid flash storage backups that promises one-second recovery times from cyber attacks.
(Reporting by Eric Auchard; Editing by Mark Potter)