Darktrace stockmarket flotation backer withdraws over Mike Lynch connection

Lynch who faces extradition to the US, owns about 40 per cent of the UK cybersecurity company valued at £4 billion

A planned stock market flotation for UK-based Darktrace, which produces AI-enhanced cybersecurity solutions, is in doubt because of the company's associations with Mike Lynch, former CEO of Autonomy.

According to Sky News, Swiss bank UBS has pulled out of backing Darktraces's initial public offering (IPO) on the London stock market, which values the company at around £4 billion.

UBS's reticence has been prompted by ongoing extradition proceedings launched against the biggest shareholder in the company, Mike Lynch, who owns around 40 per cent of the company through his investment vehicle, Invoke Capital.

Darktrace CEO Poppy Gustafsson and chairman Robert Webb are also Ex-Autonomy executives.

Lynch, who stepped down from Darktrace's board in 2018, faces charges of conspiracy, securities fraud and wire fraud related to the sale of his company Autonomy to Hewlett Packard in a $11.1 billion deal in 2011.

A few months after the deal was closed, HP wrote down Autonomy's value by $8.8 billion, claiming that Lynch and former CFO Sushovan Hussain had inflated Autonomy revenues to make the company look more valuable than it actually was.

UBS also faces problems of its own after a Dutch court ruled that its CEO Ralph Hamers should face money-laundering investigations relating to his previous post at ING bank.

According to Sky, Darktrace says that its IPO will not be affected by the UBS decision, but the issue and the involvement of Mike Lynch may give other potential investors cold feet, particularly those in the US where Sushovan Hussain is serving a five-year prison sentence for fraud.

Launched in 2013, the Darktrace boasts clients such as Coca-Cola and Siemens and its revenues doubled in 2019 to more than £106 million pounds. The company employs more than 1,200 people with headquarters in Cambridge and San Francisco.

According to Computing Delta research, Cambridge-based Darktrace is seen as an affective performer in the fast growing AI-enhanced solutions space, and is perceived as one of the market leaders.