Shares in British cybersecurity group Darktrace have rocketed on their London Stock Exchange debut.
The company’s initial public offering (IPO) valued it at £1.7bn ($2.3bn), which equated to 250p a share. However, within minutes of conditional trading, shares jumped to 350.4p, a rise of 38%.
Darktrace, which was founded in Cambridge in 2013, uses artificial intelligence (AI) technology to spot cyber threats for businesses.
The AI is used to build what it calls an "enterprise immune system" that monitors company's computer networks to detect unusual activity and then respond to it. The technology stands in contrast to traditional cyber security software that tries to build a wall around networks to block intruders.
It also has a base in San Francisco in the US, with more than 44 offices across the globe, and employs over 1,200 workers.
The Darktrace listing is one of the most prominent to emerge from the UK’s cluster of tech unicorns - companies with a valuation of at least $1bn (£718m).
But the company did lower its initial pricing range for the float — it had originally targeted a valuation of £3bn.
Company investors include venture capitalists Balderton Capital, Talis Capital, Hoxton Ventures, Summit Partners, KKR, TenEleven Ventures, Insight Partners and Vitruvian.
Invoke is unable to sell stock for 180 days, while employees are subject to a 360 day lock-up. Ordinary retail investors can start buying Darktrace shares from Thursday 6 May.
Last year, Wall Street bank Goldman Sachs (GS) reportedly declined a role in the blockbuster IPO due to legal issues surrounding its biggest shareholder Invoke Capital, which was founded by Mike Lynch.
Goldman raised concerns about the billionaire tech entrepreneur’s ongoing extradition battle over the $11bn sale of software company Autonomy to Hewlett Packard in 2011.
Lynch is facing a hearing this year after US authorities charged him with 17 counts or securities and wire fraud. He submitted himself for arrest in February this year and was given bail in return for £10m security.
In 2018, Lynch stepped down from the Darktrace board. He denies the charges against him.
Some firms have also questioned whether underwriting the stock market float could constitute a potential breach of Britain's Proceeds of Crime Act.
The company retains close links to the intelligence community: former MI5 director general Lord Evans and the CIA's former chief information officer, Alan Wade, both sit on its advisory board. Former home secretary Amber Rudd is an advisor.
The IPO comes just weeks after Deliveroo’s (ROO.L) disastrous float which saw shares plummet by 30% in the first half hour of trading, wiping more than £2bn off the company’s value.
The loss-making food delivery company, which is backed by Amazon (AMZN), suffered one of the worst debuts on record.
“Given the sharp boost in initial trading there will inevitably be some criticism that the listing was priced too low, however given what happened with Deliveroo maybe expectations were adjusted lower by a little too much,” Michael Hewson of CMC Markets said.
He added: “Unlike Deliveroo there are few concerns about the sustainability of its business model, however the company has as yet been unable to turn a profit.
"That in itself shouldn’t be a problem, successful businesses are rarely profitable straight out of the traps, however there is significant growth potential in the cybersecurity market.”
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