May 10, 2021

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Darktrace shares rose more than 30% after the float


Darktrace shares are up over 30% after the company is listed on the London Stock Exchange for the first time

  • Investors piled up in the Cambridge-based cybersecurity firm
  • The strong opening was a major boost to London’s tech sector
  • Darktrace lowered its initial valuation by £ 1 billion earlier this week

Darktrace stock jumped more than 30 percent after the company was introduced in London for the first time.

Investors piled up in the Cambridge-based cybersecurity company yesterday, raising its share price from 250 pence to 330 pence, and raising its market value from 1.7 billion pounds to 2.2 billion pounds.

The strong opening, under the banner of “DARK”, was a major boost to London’s tech sector, and an indication that investors have laid behind the failure of the Deliveroo IPO.

On the Rise: Darktrace, led by Bobby Gustafson (pictured), downgrades its initial valuation by £ 1 billion

Darktrace lowered its initial valuation by £ 1 billion earlier this week to avoid the fate of Deliveroo, which suffered a 30 per cent drop in its first day of trading.

CEO Poppy Gustafsson said: “This achievement marks an exciting day for Darktrace. Our company is deeply rooted in the UK’s tradition of scientific and mathematical research, so we are particularly proud of our listing on the London Stock Exchange.

The company was founded in 2013 by computer scientists and mathematicians from the University of Cambridge, and cybersecurity professionals from the government security agency GCHQ. It now operates out of 40 offices worldwide with 1500 employees.

The company creates digital products that use artificial intelligence to automatically detect, investigate and respond to cyber threats in real time. The company is running into losses despite acquisitions jumping 45 per cent to £ 144m in the last financial year. Darktrace raised £ 143.4 million in total proceeds from the float and existing shareholders sold £ 21.7 million of shares.

It had previously targeted a valuation of up to 3 billion pounds, before settling in a range between 1.6 billion and 1.9 billion pounds on Monday, which is equivalent to a share price of 220 to 280 pence.

The offering comes on the heels of the successful IPOs of The Hut Group technology in September 2020, now valued at £ 6 billion, and Pensionbee, which was listed last week and is now valued at £ 396 million.

But the involvement of British tech billionaire Mike Lynch, who was Invoke Capital who was the first and largest shareholder of Darktrace, meant a cloud hanging over the float.

The 55-year-old struggles to extradite criminals to the US as he is accused of 17 fraud counts related to his takeover of Autonomy, a software developer he co-founded.

US authorities accused Lynch of making Autonomy accounts more attractive before Hewlett Packard’s $ 11 billion (£ 7.9 billion) in 2011.

The computer giant broke $ 8.8 billion (£ 6.3 billion) of Autonomy’s value a year later, of which $ 5 billion (£ 3.6 billion) was attributed to an alleged accounting fraud. He could face a maximum prison sentence of 25 years if found guilty. Lynch denies all the charges against him.

Success: The offering comes on the heels of the Hut Group technology's successful IPO in September 2020, now valued at £ 6 billion.

Success: The offering comes on the heels of the Hut Group technology’s successful IPO in September 2020, now valued at £ 6 billion.

Darktrace warned in its IPO filings that the billionaire’s previous investments could lead to potential liabilities in the future.

Lynch and his wife own a 16.2 per cent stake, which was valued at £ 389.3m last night. The presidents warned in the prospectus of the potential for “significant damage to the group’s reputation”, adding that this could affect the share price in the future.

But, despite this, Lynch is allowed to continue as a member of the company’s Science and Technology Board, an advisory group.

“We owe a lot of gratitude to the Invoke team for their pivotal role in vision, technology, stature and operational input in the early years, without which success today would not have been possible,” Gustafson said yesterday.

The 38-year-old joined the company in 2016 and became an OBE in 2019 for services to the cybersecurity industry.

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