Darktrace Targets Valuation of Up to $2.6 Billion in London IPO

(Bloomberg) -- Cybersecurity company Darktrace Plc is targeting a valuation of as much as 1.9 billion pounds ($2.6 billion) in a London initial public offering, boosting confidence in the City’s ability to attract technology listings post-Brexit and after Deliveroo Holdings Plc’s recent flop.

Darktrace is marketing shares in the offering at 220 pence to 280 pence apiece, according to terms of the deal seen by Bloomberg News. The company plans to sell 51.1 million to 65.1 million new shares and looks to raise proceeds of $200 million.

Management and employees are seeking to sell about $45 million of existing shares, with no sales by board members or the company’s top shareholders. Some former holders of its convertible loan notes could consider offering as much as $75 million to enable additional IPO liquidity, subject to price, the terms showed.

Darktrace is set to start trading on the London Stock Exchange’s premium segment on May 5 and expects to be eligible for FTSE’s benchmark equity indexes. The company, which is looking to list a stake of at least 20% in the IPO, has the option to increase the deal size by 15% if there’s sufficient investor demand.

Coming in the wake of food-delivery startup Deliveroo’s disastrous debut at the end of last month, Darktrace’s deal signals London remains an appealing venue for fast-growing companies. And Alphawave IP announced a rare British listing for a semiconductor technology firm on Thursday. U.K. IPOs have raised nearly $10 billion this year, according to data compiled by Bloomberg.

Darktrace plans to use proceeds to accelerate new product development, “drive broader awareness of the company’s products globally,” to strengthen its balance sheet and provide financial flexibility.

The company has been putting the pieces in place since at least late 2019 for a public offering. It was founded in 2013 by veterans of U.S. and British intelligence agencies and mathematicians from the University of Cambridge. Its technology uses artificial intelligence to learn how organizations work and employees communicate to detect irregularities and wall off cyberattacks to prevent them from spreading.

The listing has stirred up some dust, as Darktrace is one of the companies that received early funding and advice from British entrepreneur Mike Lynch’s Invoke Capital. Lynch, the founder of Autonomy Corp., is awaiting a verdict on a trial involving Autonomy’s more-than $10 billion sale to Hewlett-Packard Co. a decade ago. HP wrote down the vast majority of the deal in 2012 and has alleged that Lynch and his chief financial officer orchestrated an accounting fraud to make Autonomy more attractive in the sale, which both men have denied.

Darktrace said that its ties to Lynch and other ex-Autonomy executives represent a risk to the company. In addition to potential damage to its reputation, it said there’s a small chance of money-laundering offenses related its ties to Invoke and the risk of liabilities related to former Autonomy employees working at the company.

Lynch serves on Darktrace’s science and technology committee. A number of its executives also have Autonomy pedigree, including Chief Executive Officer Poppy Gustafsson and Chief Strategy Officer Nicole Eagan. Invoke is represented on Darktrace’s nine-member board by Vanessa Colomar. Newly appointed Chairman Gordon Hurst is also also on the board of Invoke’s fraud-detection business Featurespace.

Jefferies International Ltd., Joh. Berenberg, Gossler & Co. KG and KKR Capital Markets Partners LLP will arrange the sale if it goes ahead, with Needham & Co. and Piper Sandler & Co. as joint bookrunners.

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