RE: Darktrace share price set for more pressure as lock-ups end31 Oct 2021 09:31
Tech investors including Mike Lynch will be free to sell almost £3bn shares in Darktrace in the coming days, piling further pressure on the beleaguered cybersecurity company.
A freeze on insiders offloading shares will expire for the company’s biggest investors on Wednesday, days after Darktrace lost a fifth of its value when a City analyst said it was overvalued.
Mr Lynch, the former Autonomy boss, owns almost £900m in shares through stakes alongside his wife Angela Bacares, meaning his stake is worth more than the $815m (£593m) he made from the contentious 2011 sale of his software company to Hewlett-Packard.
Mr Lynch is fighting extradition to the US, where he has been charged with fraud over Autonomy’s £7bn sale to HP, and also awaits judgement in a $5bn civil fraud trial brought by the company in the High Court. He denies the charges.
Mr Lynch’s venture capital firm, Invoke, has been an investor since Darktrace’s early days.
Other shareholders able to dispose of their stakes include partners at Mr Lynch’s venture capital firm, Invoke, who own another £380m of shares, and major investors Summit Partners and KKR.
Darktrace, one of the biggest technology flotations this year, soared to FTSE 100 status this month after quadrupling in value since its April float.
However, shares fell by 21pc last Monday when broker Peel Hunt said the company was worth half its value and suggested that its marketing was not matched by its technology.
The end of lock-up periods can push prices down by flooding the market with new shares if early investors choose to realise their gains. In Darktrace’s case, it will more than double the number of shares available to be traded.
The company has previously warned that the end of the 180-day “lock up” period could send shares falling.
Darktrace’s prospectus said: “The market price of the shares could be negatively affected by sales of substantial amounts of such shares in the public markets, including following the expiry of the lock-up period, or the perception that these sales could occur.”
Ghosts of Autonomy continue to haunt Darktrace
For Mike Lynch, it will have felt like deja vu.
Darktrace, the cyber security firm Lynch had shepherded from foundation to London listing, was on the cusp of joining the FTSE 100. Shares had almost quadrupled since its April float to value it at over £6bn, placing it among Britain’s biggest publicly traded tech companies.
A decade after minting an $815m fortune by selling his software firm Autonomy to Hewlett Packard, Lynch’s stake in Darktrace was worth around £1bn - a stunning return after backing the company from its early days as a Cambridge University research project in 2013.
But last Monday, two days before it entered London’s blue-chip index, a research note landed in traders’ inboxes. Titled “a reality check”, City brokers Peel Hunt claimed Darktrace was worth half of its stock market value and that its current share price repre
Sign In
Follow the stocks
