Former L-3 leader turns to biometrics

Robert LaPenta, who helped build L-3 Communications into an $8 billion defense, homeland security and communications powerhouse, has set his sights on doing the same thing in the biometrics industry.

After stepping down as L-3's president and chief financial officer in April, he formed L-1 Investment Partners, a Stamford, Conn.-based private investment management firm, which he characterized as somewhere between a fund and a leveraged buyout business.

He's looking to build a top-tier biometrics and security company.

LaPenta said he realized there was a tremendous opportunity in biometrics when L-3 was building its homeland security business. He said small, good technology companies with special applications don't always have the financing, management depth, synergies and marketing presence they need.

"And it seemed to me that the technology was coming of age just at the exact time when the market was beginning to develop," he said. "With all of those things pointing in the right direction, I thought this would be a great opportunity and that's why I decided to pursue it."

LaPenta's firm is waiting for the right opportunity to acquire a platform company to build the business on, LaPenta said.

There is no pressure to buy a company immediately, he said, but he is interested in several. LaPenta said that companies such as Cogent Systems and Identix are good examples of platform companies.

He said L-3 leaders realized the importance of secure broadband communication technology for the military, and he has a similar intuition now.

"I think in security — homeland security, travel, transportation, network security, e-commerce, access security, you name it — it's going to be biometrics," he said.

Joel Fishbein Jr., a senior technology analyst at Janney Montgomery Scott, a large Philadelphia-based investment firm, said LaPenta's entrance adds excitement to a fragmented industry.

"What I think is when you get guys like LaPenta coming in to the market saying, 'I think this market's real, I think it's going to grow,' I think that's going to add a level of confidence from an investment perspective," Fishbein said.

The biometrics industry, which has the potential to reach $4.5 billion by 2009, is an infant market. There are successful companies, but not mature ones, LaPenta said. And there are small companies with $8 million to $10 million in sales and valuable market capitalization, he added.

"What I hope to do is put together a company that has a tremendous amount of capability that could take advantage of what I think is going to be a rapidly growing, enormous domestic and international capability," he said.