Report: Dell Mulls SecureWorks IPO in Hot Cybersecurity Market

Dell, yes the same Dell that two years ago won a seven-month long battle to secure a $24.8 billion private equity buyout of the company, reportedly is mulling taking its SecureWorks unit public in what could result in a $1 billion valuation for the cybersecurity business.

The computer giant bought out SecureWorks, which provides managed cybersecurity services to enterprise customers, in 2011 for some $612 million. According to the Atlanta Business Chronicle, which reported word of Dell’s SecureWorks IPO plans, the vendor has since leveraged SecureWorks to expand its security footprint and boost the local workforce.

The report, in describing SecureWorks chief executive Mike Cote as a “trusted confidant” of Dell founder and chief executive Michael Dell, said Dell’s grand plan is to spin off the SecureWorks business and its other security-related operations such as SonicWall, which it acquired in 2012, into a public offering.

No target date for the IPO was mentioned in the report nor was there word about investment bankers hired to oversee the process.

According to one source in the Atlanta Business Chronicle report, Dell’s motivation behind the SecureWorks IPO is to gain working capital for the parent company.

“The reason they are doing it is to get capital into parent Dell,” the source reportedly said.

The Atlanta Business Chronicle isn’t the only outfit reporting a possible SecureWorks IPO.

The 451 Group, a San Francisco-based IT researcher and consultant, said Dell intends to sell about one-third of its interest in the SecureWorks unit in an IPO later this year.

“Rumors are now swirling that Dell is planning to sell a minority stake in SecureWorks, a managed security service provider (MSSP) that Dell acquired in January 2011 for $612m,” wrote Brenon Daly, 451’s Financials research director, in a recent blog post.

“As we understand it, the plan is to sell about one-third of the SecureWorks division in an IPO later this year,” he said. “We estimate revenue at SecureWorks at just under $300m, with the business running right about breakeven. Assuming it gets a valuation comparable to what has been handed out in recent MSSP transactions, SecureWorks could be valued at roughly $1bn.”

And, Fortune reported that Dell board member and Silver Lake managing partner Egon Durban said earlier this year at a Brainstorm Tech conference that the company is considering siphoning off parts of its operation in a public offering.

Durban said that Dell hadn’t yet committed to a spin off IPO candidate but that SecureWorks and its cloud software Boomi business might be possibilities for an IPO, Fortune reported.