Interview with Mr. K. Souaid, Keystone Equity Partners

Company referenced in this item: IrisGuard

FB
You have just recently acquired a 30% stake in IrisGuard. Can you please tell us about this investment?

GrowthGate
GrowthGate (managed by Keystone) is a buyout firm that invests in middle market, privately-held companies that are well managed, profitable and have the prospects of becoming future champions. IrisGuard Inc. exhibited all of these attributes so the investment decision was pretty straightforward. We usually take strategic minority stakes that permit us to import a ‘performance-based’ culture: a defined strategy and a well-crafted business plan to carry it. The majority of our investments, and IrisGuard is no exception, are in the form of growth capital (i.e., an injection of fresh equity) as a means to fund future expansion plans either organically or through bolt-on acquisitions.

FB
What were some of the factors that led to your decision to invest in a biometric company?

GrowthGate
We view the biometrics sector as one of the most vibrant and promising parts of what we call ‘social technologies’. These are technologies that produce a set of applications with a highly practical and multi-facet usage. Biometrics deals with every day situations from security to credentialing for transactions. With an increase in the uptake of such technologies by civilian and non-civilian users, a high pent up demand for a variety of applications, and a growing world population (especially in
emerging markets), biometrics is poised to become a ‘must have’ not a ‘smart to have’ option for governments & businesses alike.

FB
Why did you decide to invest in Iris technology and did you investigate other biometric technologies like fingerprint or facial?

GrowthGate
End user demands –in any given service or product- migrate from basic to high definition and zero tolerance for error. Mobile phones are a good example with the evolution of the 1G, 2G and 3.5G applications. Iris Recognition is at the forefront of the biometrics technology, hence our interest to invest in the future generation of applications that can capture the widest footprint across all economic segments.

FB
What specifically about IrisGuard Inc. caught your interest?

GrowthGate
The management’s skills in adapting the Iris Recognition Technology to a varied set of practical applications across the board (security & border control, social & governmental services, banking, computing and even voting systems), while innovating the delivery and maintaining high quality delivery at contained costs.

FB
The press release announcing your investment states that GrowthGate, “follows a ‘buy and build’ investment strategy”. Can you please elaborate on this for us?

GrowthGate
The 'buy & build' strategy is in direct contrast with the ‘buy & flip’ approach that some PE firms follow. It means that GrowthGate invests in companies that are not fully mature and surely not saturated to warrant an exit in the short term. We get involved beyond signing a check and immerse ourselves in studying, enhancing and developing the business’ core lines
and competencies, under the leadership of the existing management, in order to reach a critical mas (revenues/EBITDA/markets and footprint) prior to considering an exit (in 3 to 5 years).

Mr. K. Souaid is the founder and Managing Partner of Keystone Equity Partners WLL. Prior to forming Keystone in late 2006, Mr. Souaid was MD of Global Investment Banking at HSBC Bank (Middle East) http://www.growthgate.com/  http://www.irisguard.com/