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Darktrace soars on London debut, 38% above IPO price

By Reuters

By Paul Sandle

LONDON (Reuters) – Darktrace shares opened 38% higher in the British cybersecurity company’s market debut on Friday.

The shares were priced at 250 pence in its London listing that valued the company at 1.7 billion pounds ($2.37 billion), lower than an original target closer to $4 billion, sources told Reuters.

They were trading at 325 pence at 0737 GMT, well above the 220-280p range set by its bankers when its roadshow began on Monday.

Its strong debut will be a fillip for a London IPO market battered last month when Deliveroo, the biggest listing of the year, plummeted after many major institutional investors steered clear.

Founded in 2013 in the university city of Cambridge, Darktrace uses AI to understand IT networks and detect attacks by identifying unusual behaviour from within.

It was backed by tech entrepreneur Michael Lynch, who played a key role in building the company and was on its board until 2018.

Lynch is fighting a U.S. extradition request to face fraud charges related to the sale of Autonomy, a software company he founded and led, to Hewlett-Packard.

He is also waiting for the verdict of a multi-billion dollar civil claim by HP at London’s High Court. He denies the charges.

Darktrace detailed the risks related to Lynch in its registration documents, including reputational risk and potential liability in relation to possible money laundering, although the company said the risk of the latter was low.

The tech company offered 66 million shares in the IPO, valued at 165 million pounds and representing 9.6% of the capital.

It raised gross proceeds of about 143.4 million pounds by selling new shares, excluding any over-allotment option, to accelerate product development and strengthen its balance sheet.

CEO Poppy Gustafsson said the company owed much gratitude to Lynch’s team at Invoke Capital for their pivotal role in the early years, “without which today’s success would not have been possible”.

Other investors in the company included Talis Capital, Hoxton Ventures, Summit Partners, KKR, TenEleven Ventures, Insight Partners, Vitruvian and Balderton Capital.

($1 = 0.7177 pounds)

(Reporting by Paul Sandle; editing by Guy Faulconbridge and Jason Neely)