UK’s Darktrace Faces Reality: Cuts Valuation For Pending IPO

Darktrace, a cybersecurity company, will be slashing the value of its forthcoming London flotation, looking instead for a cautious approach to avoid the kind of disaster that befell Deliveroo’s attempt, a Sky News report says.

The report says Darktrace and its advisors are now looking at a valuation more between £2.4 billion and £2.7 billion for the loss-making company.

According to banking sources quoted by Sky, the details might be sent out in an announcement to the London Stock Exchange by Monday (April 26) morning.

With the lower price range Darktrace is likely looking to see a successful after-market performance for its shares. The company had previously been looking at a value of as much as $5 billion. By choosing to seek a lower valuation, the company was likely looking at the Deliveroo initial public offering (IPO) from last month, which saw shares slumping more than a quarter on the first day of trading.

And Sky reports that Darktrace is also looking to mitigate “noise” about the company’s links to its first investor Mike Lynch, who is currently fighting extradition to the U.S. over the sale of software company Autonomy Corporation to Hewlett Packard in 2011.

But even despite the lowered valuation, the company is likely to still see a multimillion pound stake for Poppy Gustafsson, the 38-year-old chief executive of the company.

Darktrace’s journey to an IPO has been rough, with UBS’ resignation as one of its sponsors over concerns around Lynch. However, those close to the situation said the UBS decision came down to anxiety within the Swiss bank over a decision in Dutch court that its new chief executive Ralph Hamers needs to face investigation into a money laundering scandal at his former job at ING.

Darktrace, which was founded in 2013, works with artificial intelligence to seek out threats to IT systems. The company says its tech can track threats in real time while strategizing about how to respond.