Darktrace prices IPO £1.3bn lower than forecast, shares surge

Posted on April 30, 2021 by Jonathan Symcox

Poppy Gustafsson, Darktrace

Darktrace CEO Poppy Gustafsson

Update: Darktrace shares surged 40% above the offer price on the opening morning of trading, above 350 pence per share

Cybersecurity giant Darktrace has priced its stock market flotation at £1.7 billion. 

The offer price of 250 pence per share is significantly below initial forecasts which would have given it a market capitalisation of £2.5-3bn. 

After food delivery disrupter Deliveroo dropped a quarter of its value on its first day of trading following a disastrous IPO, the cautious pricing may be due to Darktrace’s desire to see a successful after-market performance for its shares.

Darktrace has opted against issuing dual-class shares, unlike Deliveroo founder Will Shu, whose decision to give himself 20-times the voting rights of other shareholders was widely criticised. 

It has not been a straightforward road to its planned launch on the main market of the LSE. UBS resigned as one of its main IPO sponsors, with reports claiming that this was due to the role of billionaire tech entrepreneur Mike Lynch, who is battling extradition to the US, in the company.  

Lynch became the first shareholder in Darktrace through his investment company Invoke Capital, which remains Darktrace’s biggest shareholder. However, Lynch no longer has any direct involvement with the running of the company and stepped down from the Darktrace board in 2018.   

The float is for only 10% of the company, with existing shareholders expected to cash in around £21m worth of shares.

Darktrace’s self-learning security technology defends more than 4,500 organisations worldwide by autonomously detecting, investigating and responding to threats from insiders, remote working, ransomware, data loss and supply chain vulnerabilities.   

The firm, which has 1,500 employees and 44 office locations, recently appointed former BT CEO Sir Peter Bonfield CBE and Lord Willetts, the former science minister, to its board, as well as appointing  new chairman in Gordon Hurst, who also chairs Featurespace.  

It also dropped co-CEO Nicole Eagan, who is based in the US, to the position of head of strategy, with Poppy Gustafsson now its sole chief executive ahead of the planned float.  

Gustafsson, a former Autonomy colleague of founder Lynch and now an adviser to Boris Johnson, will still come out of the process millions of pounds richer. 

“This milestone marks an exciting day for Darktrace. This business is one built by collaboration,” she said. 

“Our company is deeply rooted in the UK’s tradition of scientific and mathematic research so we are especially proud to be listing on the London Stock Exchange.  

“To our world-class inventors at our R&D centre in Cambridge, today is really about celebrating you. Not only have you created a fundamental technology that 4,700 organizations now rely on to help them tackle novel and advanced cyber-threats, but you remain committed to innovation, pushing the envelope and shaping the world with your ideas.  

“Today is just the beginning.” 

From fiscal year 2018 to fiscal year 2020 the group’s revenue has grown from $79.4m to $199.1m. Adjusted EBITDA has improved from a $27m loss to a $9m profit over the same period. 

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