British private equity firm Tern Plc’s (LSE: TERN) authentication and encryption services company Cryptosoft, has acquired 100% of Freemont, California-based identity authentication startup DeviceAuthority Inc.

The transaction closed on April 21, 2016. After regulatory filings the new company will operate under the Device Authority name.

Device Authority’s previous investor Alsop Louie Partners, a San Francisco based venture capital firm, is reportedly investing $500,000 alongside a £1 million investment by Tern to fund business development, valuing the combined entity at £13.6 million.

Tern, listed on AIM with a current market capitalization of approximately £9 million, owns 95% of the equity of Cryptosoft, which it acquired for £300,000.

“Both companies coming together further advances our strategy of providing customers with the most reliable, cost-effective IoT security solution, through a comprehensive portfolio of products”, said Darron Antill, CEO of Cryptosoft Ltd.

“I’m very excited about joining forces with the Cryptosoft team and what this represents for the security of IoT solutions,” said Talbot Harty, founder and CEO of Device Authority Inc.

“With this exciting combination we expand our current product offerings and add an innovative patent portfolio of security technologies that adapt to the broad and evolving needs of the IoT marketplace”, said Albert E. Sisto, executive chairman of Device Authority and director of Tern.

Angus Forrest, executive chairman of Tern plc said he expects IoT to “be bigger than e-commerce and mobile” with one of the major areas of growth being the “safety of signals and data.”

Device Authority’s D-Factor authentication engine identifies devices to establish trust between endpoints, gateways and applications. For IoT, D-Factor eliminates the vulnerabilities and inefficiencies of static keys and certificates by transforming devices into dynamic keys for authentication and device-derived crypto applications. The startup was founded in 2013.

Cryptosoft is a leader in policy driven authentication and encryption services for connected Internet of Things (IoT) and Machine-to-Machine (M2M) devices. Cryptosoft’s platform solves the data security & authentication challenges for the Internet of Things (IoT). The software platform significantly reduces the end-to-end attack surface, protecting critical company and customer data assets. Cryptosoft partners with leading IoT ecosystem provider ThingWorx and security leader Symantec. The company was founded in 2008.

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