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Cybersecurity start-up Darktrace plans to go public in London despite Deliveroo's IPO flop

Key Points
  • Darktrace on Monday announced plans for an initial public offering on the London Stock Exchange.
  • It comes despite concerns over the lackluster market debut of food delivery firm Deliveroo.
  • London is looking to relax its listings rules in a bid to attract more high-growth tech companies.
A Darktrace cybersecurity software demonstration shows how a global problem can start with just one employee's work station.
Michael S. Williamson | The Washington Post | Getty Images

LONDON — British cybersecurity start-up Darktrace said Monday that it plans to go public in London, defying fears that Deliveroo's disappointing IPO could put other tech firms off listing in the city.

The platform of the London-based firm uses artificial intelligence technology to detect and respond to cyberthreats in a business' IT systems. It says its self-learning AI can monitor threats in real time and come up with ways to strike back.

Darktrace, founded in 2013 by a group of former intelligence experts and mathematicians, said it intends to float at least 20% of issued share capital in an initial public offering on the London Stock Exchange's premium market. This would make it eligible for inclusion in benchmark indexes like the FTSE 100.

"Our intention to list on the London Stock Exchange marks a major milestone in Darktrace's history of rapid growth, and a historic day for the U.K.'s thriving technology sector," said Poppy Gustafsson, Darktrace's co-founder and CEO.

"We are proud to be part of that tradition of British innovation, as the U.K. becomes a leading global centre for the development of AI," she added.

Darktrace's IPO announcement comes despite concerns over the lackluster market debut of Deliveroo, the Amazon-backed food delivery company. Deliveroo shares plunged as much as 30% on their first day of trading, making it one of the worst London IPOs for a large company.

Deliveroo's IPO flop also threatened to embarrass U.K. officials, who threw their weight behind the company as it announced plans to go public in the city. London is looking to relax its listings requirements in a bid to attract more high-growth tech companies.

But some analysts said Deliveroo's woes may be limited to the company, which has been dogged by employment rights concerns, rather than a broader indication of trouble for London tech listings. Deliveroo said it's "just starting life as a public company" and is "confident" in its ability to deliver long-term returns for shareholders.

Darktrace reported revenue of $199.1 million for the year ended June. 30, 2020, up 45% from $137 million in the same period a year earlier. Losses totalled $28.7 million, though this was narrower than the $34.7 million Darktrace lost in its 2019 fiscal year.

Darktrace's biggest investor is Invoke Capital, the venture fund of Mike Lynch, a U.K. entrepreneur. Lynch currently faces the threat of potential extradition to the U.S. over fraud charges related to the sale of Autonomy — the software firm he founded — to Hewlett-Packard in 2011 for $11 billion. Lynch denies any wrongdoing.

Gustafsson and Chief Strategy Officer Nicole Eagan both used to work at Autonomy. Darktrace shares the same office building as Invoke in London, but says that Lynch has no direct involvement with the day-to-day running of the company.

The firm, which was last valued at $1.65 billion in its last private financing round, has tapped Jefferies, Berenberg, KKR Capital Markets to lead the IPO if it goes ahead, with Needham & Co. and Piper Sandler acting as joint bookrunners. It'll use funds raised from the float to develop new products and strengthen its balance sheet.