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Steve Ruffley

Protecting against cybercrime does pay

Sophos is planning the UK’s biggest tech IPO to date. With businesses and individuals now constantly online, cyber security sounds like a plausible industry for growth.
What amazes me when I listen to politicians and world leaders is the fact they have very little real understanding of the current pace of change. The politicians who lived through the 60s, 70s, 80s and 90s up to the present have seen steady change. However if you think what’s been achieved in the last 20 years of technological advancements, it probably accounts for more than the last 50+ years combined.
So by that rationale what will the world be like in another 20 years? With the pace of change increasing will it actually be closer to 100 years further advanced in real terms? What will be more or less important to people? Know that and you’ve a sound basis for investment.
This is why the technology companies are ruling the world. They move too quickly for the old world thinking of the current political powers. The likes of Microsoft, Facebook, Apple and Google have such vast cash reserves that they could bail Greece out 1000 times over and still have change. They literally can do whatever they can dream.
Investors are increasingly keen on technology. This once high-risk sector is now the darling of the hedge fund and portfolio world. The latest tech area to raise huge interest is cyber security. With the majority of the Western world living a significant part of their lives online, keeping their data, personal information and identities safe is becoming a huge industry in its own right.
For businesses the cost of a ‘cyber-attack’ is much more important. The starting cost can be from £1.46m according to a recent report from PwC, which is up nearly 50% from the previous year. The need for protection is an obvious business necessity not only from a security but also a reputation point of view.

Cyber security firm Sophos is looking to raise £100m from floating on the London Stock Exchange this week, one of the biggest tech floats in UK history. They are looking for a valuation of between £1-2bn. Having pulled IPOs in both 2007 and 2009 this is clearly something the company’s leadership has thought long and hard about.
Fast facts:

  1. Cybercrime is worth $445bn annually
  2. UK cybercrime costs the UK £27bn a year
  3. New techniques include cyber ransom and smart spam
  4. 800m people were affected in 2013 alone
  5. The internet economy is valued at $2-3tn a year

With the sheer numbers and amounts of money involved it’s not hard to understand why banks, retailers and just about every other business that has an online presence is looking for a reliable force to combat this growing crime area and protect their own and their customers’ valuable data.
After two stalled IPO attempts in the last 10 years the founders are sighting this as the right time to float and raise capital for future expansion. If the world and the pace of technological change does speed up as I have suggested this has to be a sector to watch.
Steve Ruffley
Chief Market Strategist
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The content of this article is the personal opinion of the author and not The information and comments provided herein under no circumstances are to be considered an offer or solicitation to invest. Nothing herein should be construed as investment advice. The information provided is believed to be accurate at the date the information is produced.

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