Quantum encryption platform in SPAC deal
Arqit’s quantum encryption platform, called QuantumCloud, is claimed to make the communications links of any networked device secure against current and future forms of hacking – even an attack from a quantum computer. Unlike current “public key infrastructure” or “PKI” encryption, which uses pairs of keys (a public key to encrypt messages and a private key to decrypt messages), QuantumCloud uses symmetric encryption, where only one key (a secret key) is used to both encrypt and decrypt electronic information.
PKI, says the company, is no longer fit for purpose in a hyperconnected world, and within the decade will likely be vulnerable to quantum computer attacks, while symmetric encryption is a well understood encryption technology that is known to be more secure than PKI, including against quantum attack. However, to date there has been no secure way to distribute symmetric encryption keys at scale.
The company says it has invented a way to create those keys at end points when they are needed, at scale, securely, at any kind of end point device and in groups of any size.
“The world needs simpler, stronger cyber security, and Arqit addresses that need,” says David Williams, Arqit CEO. “After four years of innovation in stealth mode by a world leading multi- disciplinary teams of scientists and engineers, we are ready to go to market. This technology is important and we need to take it to hyperscale as quickly as possible, because the problems we solve are problems for everyone.”
QuantumCloud puts a small software agent at any end point device. This software creates an unlimited number of symmetric keys with partner devices. The process, says the company, is very simple and fast.
Currently the company’s system uses source keys that are originated in data centers. However by 2023 the company says it plans to launch two quantum satellites to assume that role, which will use a new quantum protocol invented by the company that will solve all of the known problems of satellite quantum key distribution. The satellites, says the company, will create a backbone of secure keys within data centers all over the world, and a quantum safe boundary protecting those data centers.
A customer/user can create an infinite number of symmetric key pairs, in groups as large as are needed. Keys are never “delivered,” so they cannot be intercepted. They are created at the end points and therefore can never be known by third parties. They can be used only once if necessary and replaced frequently. The service is sold and fulfilled on a self-service basis in the cloud making it an easily scalable business model.
The company’s current customers include the UK Government, the European Space Agency, BT plc, and Sumitomo Corporation. In addition, says the company, many companies like Verizon, BP, Northrop Grumman, and Iridium are currently testing the use of its technologies in different use cases.
The transaction values the combined company at a pro forma enterprise value of approximately $1.0 billion, and is expected to provide up to $400 million of gross proceeds to Arqit from a combination of $345 million of cash held in Centricus’ trust account (assuming minimal redemption from Centricus existing shareholders), and approximately $70 million from a fully committed PIPE with participation from Arqit business partners Virgin Orbit and Sumitomo Corporation, and Centricus sponsor Heritage Group.
Centricus CEO Garth Ritchie says, “This transaction will give Arqit the ability to establish itself as a leader in the encryption space – the prospect of the threat from quantum computing will serve to accelerate the broad adoption of Arqit technology. This is a deep tech company which is many years ahead of the market. Arqit has protected its IP by remaining in stealth mode whilst filing over 1,000 claims on more than a dozen patent applications.”
“It is thanks to funding from the British Government and its VC partners that Arqit is now ready to commercialise and scale its product suite,” says Ritchie. “This will complement an already strong cohort of launch customers. The executive and advisory team are a ‘transatlantic who’s who’ of relevant cybersecurity, space and military experience – this team also enjoys peerless access to relevant enterprise customers.”
Upon closing of the transaction, a newly formed Cayman holding company, Arqit Quantum Inc., will merge with Centricus, acquire Arqit and register its shares for listing on the Nasdaq Stock Market. The company says the capital from this transaction will enable it to develop critical relationships with existing and new customers and fully scale its platform as a service with a balance sheet that gives it the speed, momentum, and the resilience needed to deliver on its commitments to customers for the long term.
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