Darktrace backers shift stakes as cybersecurity giant nears IPO | Business News
The private equity giant KKR is increasing its stake in Darktrace, the British cybersecurity company, in another step towards a potential blockbuster stock market flotation.
Sky News has learnt that a reorganisation of Darktrace's shareholder structure will result in its largest investor, Invoke Capital, modestly reducing its holding.
Invoke was set up by Mike Lynch, the technology entrepreneur whose sale of the software group Autonomy nearly a decade ago has left him facing a battle to avoid extradition to the US, as well as a host of other legal battles.
Sources said on Thursday that the reorganisation of Darktrace's share register was motivated by a desire to "tidy it up" following a string of fundraisings during the seven years since the company was established.
One insisted that the change to Invoke's stake would be "very small - low single digits percentage change, at most - and it remains the largest shareholder".
A sum of new money understood to be more than $100m (£79m) is also understood to be being injected into Darktrace by existing investors said to include KKR and Summit Partners, a US-based private equity firm.
Further details of the changes to its share register were unclear.
Darktrace supplies artificial intelligence-based cybersecurity software to corporate customers, helping them to dictate abnormal behaviour on their networks.
This month, the company said it had passed $1bn in "cumulative bookings", suggesting that its order book has been substantially boosted by the coronavirus-inspired switch to remote working for millions of employees of multinational companies.
Growing demand for its products has underpinned some of its investors' appetite to buy more Darktrace stock, with recent cyberattacks on companies such as easyJet and Honda again reinforcing the extent to which the security of multinationals' networks and data is now a fixture on boardroom agendas.
Darktrace now employs more than 1,200 people, with 44 offices and dual headquarters in Cambridge and San Francisco.
Darktrace's customers have included AIG, BT Group, Jimmy Choo, the Science Museum Group and William Hill.
It has made little secret of its desire to go public, with London and New York expected to compete to stage the listing.
An initial public offering would probably value the company at well over $2bn and could take place in the first half of next year, according to bankers who are keen to be involved in the flotation.
In February, Darktrace appointed Cathy Graham, who has been involved in a series of technology company IPOs, as its chief financial officer.
KKR and Summit invested in the company as part of previous funding rounds in 2015 and 2016.
It last raised money in a Series E round in 2018, when it said Vitruvian Partners, another private equity firm, had come on board as a shareholder.
The company is expected to launch further products in the coming months that will strengthen its credentials as a major player in the cybersecurity market for companies grappling with the challenges of remote working.
Mr Lynch stepped down from Darktrace's board towards the end of 2018, after he was charged in the US with securities fraud in relation to the $11bn sale of Autonomy to Hewlett-Packard in 2011.
He was arrested in February as part of the ongoing US criminal investigation, while the outcome of a civil trial in London is expected later this year.
The entrepreneur has stepped down from some of his other board roles but remains involved with start-ups such as Luminance, a law-focused AI company.
Poppy Gustafsson, Darktrace chief executive, said earlier this month: "To eclipse the $1bn mark in bookings is a major milestone for Darktrace as organizations around the world accelerate their adoption of AI for cybersecurity.
"Our self-learning cyber AI remains the only technology on the market that can autonomously adapt to fast-changing digital environments and protect workforces from advanced cyber-threats before they do damage."
Darktrace and Invoke both declined to comment.
Gloss