Darktrace to pick London for £2bn listing

Mike Lynch
Mike Lynch

Darktrace is preparing to float on the London Stock Exchange next year in a move that could be a major boost for the City in attracting fast-growing technology companies.

The Cambridge-headquartered cyber security business, last valued at $1.65bn (£1.3bn), is understood to be preparing to pick bankers in the coming weeks.

The company is seen as one of Britain’s most promising technology start-ups, and claims to have pioneered “self-learning” algorithms that mimic the way the human immune system fights viruses to protect corporate computer systems

Darktrace was long linked with a possible float in New York, normally seen as a prime destination for technology stocks. A London listing could be a boon for London’s advisers, generating millions of pounds in fees.

Mike Lynch, who founded Darktrace’s biggest shareholder Invoke Capital, had previously said that London appeared to undervalue technology companies.

However, recent exits from the FTSE, such as Sophos, the cyber security firm, for £3bn, and successful listings for firms such as Avast, have made the market more attractive to a niche of technology firms.

A Darktrace spokesman said: “Darktrace is hoping to go public in London in 2021. Government has made it clear that the economic recovery from the pandemic is going to be technology led. We firmly believe that technology and science are the future drivers of economic growth in this country.

“The UK needs more thriving, home-grown technology companies in it. Our continued success throughout this pandemic indicates that this is a good time for Darktrace to go public.”

A float for Darktrace is expected to see it seek a valuation of well over £1.5bn and as high as £2bn. It was last privately valued at £1.25bn. Revenues at the company surged last year to £107m, while it trimmed its losses from £27.6m to £21.8m.

Darktrace has been one of the star performer of Invoke Capital’s portfolio.

The business has more than 800 employees in 39 offices and 7,000 clients including big names like eBay, BT, T-Mobile, Prudential and Ocado.

Mr Lynch has, however, been dragged into litigation in the UK and is under investigation in the US over a 2011 deal where he sold the company he founded, Autonomy, to US technology firm HP.

HP believes Autonomy engaged in a revenue pumping scheme to inflate its value.

Mr Lynch stepped down from Darktrace’s board after he was accused of securities fraud in the US. He is facing a US extradition hearing next year. Mr Lynch has strongly denied any wrongdoing.

Sky News first reported Darktrace was planning for a beauty parade of advisors as it prepares to ramp up preparations for a London float. It has also secured more than $100m from current investors, including private equity firms KKR and Summit Partners, in new funding. 

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