TPG ups stake in Tanium, sending valuation soaring to $5B as IPO looms

TPG Growth has reportedly invested $175 million in Tanium at a valuation of about $5 billion. The deal solidifies Tanium’s position as one of the most valuable private cybersecurity companies in the world, per PitchBook data, and adds to speculation that it may soon hit the public markets.

The transaction, which consists partly of TPG’s growth arm buying stock from early employees, marks the second time the firm has backed Tanium in the last 12 months and the third overall. TPG Growth led a $100 million round in the company last May, also via a secondary sale, at a reported valuation of $3.75 billion. And in 2015, the same year the firm led a big round in cybersecurity firm Zscaler, it participated in a $148 million financing that valued Tanium at $3.65 billion. Founded in 2007, Tanium offers cybersecurity and management services for the public and private sector, with customers including banks, retailers and the US Department of Defense.

For the last few years, the company has been at the center of IPO rumors. A public offering would make sense given the company’s age and valuation. It’s not uncommon for private companies to allow early employees to cash out as they move toward the public markets. And the Bay Area-based business seems especially primed for an IPO given its financials: Last year, Tanium announced 100% YoY revenue growth and positive operating cash flow. Reports indicate that the company was profitable in 4Q 2017, though it did not expect to maintain profitability.

There may be another financing event before an eventual IPO, with Reuters reporting that other existing investors are in talks to buy $25 million of additional stock. Andreessen Horowitz is a major shareholder in Tanium, and IVP and T. Rowe Price are also among the company’s backers.

Tanium has experienced its share of controversy and high-profile executive departures. A Bloomberg report last year detailed CEO Orion Hindawi firing employees before their options vested and ridiculing employees in front of colleagues, among other claims. The article also mentions that at least nine Tanium executives left the company from late 2016 to early 2017. Hindawi later apologized in a blog post for being “hard-edged.” The controversy didn’t scare away TPG, though, which invested in Tanium for the second time just months later.