MARKET REPORT: Darktrace sees share price dented after several major investors cash out following strong run since its blockbuster IPO in April
Darktrace saw its share price dented after several major investors cashed out of the cybersecurity specialist following a strong run since its blockbuster IPO in April.
A trio of private equity investors, KKR, Summit Partners and Balderton Capital, offloaded 25m Darktrace shares for 750p each, pocketing just under £188m. The sold shares are equivalent to a 3.6 per cent stake in the business.
The sellers previously had lock-up arrangements for their stock at the time of Darktrace’s float. They have now realised a hefty profit on their investment as the company’s shares have rocketed nearly 230 per cent higher than their IPO price of 250p. However, the stock dropped 3.2 per cent, or 26p to 794p as the sale price was still at an 8 per cent discount to its Thursday closing price of 820p.
Safety first: Darktrace’s technology uses artificial intelligence to actively hunt down hackers and computer viruses if they manage to break into a network
Darktrace’s technology uses artificial intelligence (AI) to actively hunt down hackers and computer viruses if they manage to break into a network. This is different from ordinary cybersecurity, which tends to focus only on blocking attacks. The shares were relatively steady for a few months following the April listing before picking up steam in June and hitting a record high of 985p on September 23.
After starting with a market cap of £1.7billion, its value has more than trebled to around £5.7billion, making it a contender for entry into the FTSE 100.
The Footsie itself sank 0.84 per cent, or 59.35 points, to 7027.07 while the FTSE 250 dropped 0.24 per cent, or 55.52 points, to 22975.77.
Fears that the global economic recovery could be slowing have rattled investors, with the optimism following the end of lockdown and the vaccine roll-out dashed amid ongoing fuel, supply chain and cost of living crises. The energy crisis has also spread across the world, with reports emerging that China’s state-owned firms have been ordered to secure enough fuel to avoid blackouts over the winter.
However, China’s predicament could be good news for mining major Glencore, according to analysts at Deutsche Bank, who said the firm’s investors could be in line for an £11billion dividend windfall as energy demand caused coal prices to surge.
Deutsche Bank said thermal coal prices were currently at record levels amid escalating demand and a shortage of natural gas, which in turn could boost Glencore’s coal business. The shares, however, were little moved, dipping 0.3 per cent, or 1.15p, to 350.7p.
Elsewhere, sportswear retailer JD Sports got a kicking after UK competition regulators opened a probe into the firm’s merchandise deal with Leicester City FC.
On Wednesday evening, the Competition and Markets Authority (CMA) said it had reasonable grounds to suspect ‘one or more breaches’ of competition law. The investigation relates to JD’s sale of Leicester City-branded merchandise in the UK, the CMA said, although it stressed that it did not currently have enough evidence to make a final decision.
JD Sports shares dropped 1.3 per cent, or 13.5p, to 1035p in the wake of the news.
One sector in vogue was the travel industry, which saw a rebound after Australian prime minister Scott Morrison said the country will reopen to fully vaccinated international travellers in November.
British Airways owner IAG shot to the top of the FTSE100 risers list, climbing 5.3 per cent, or 9.52p to 188.02p, while Holiday Inn-owner Intercontinental Hotels was in second place, rising 3.6 per cent, or 169p, to 4925p.
Rolls-Royce, the maker of aircraft engines, also got a lift from the news, adding 2 per cent, or 2.74p, to 142.88p. Mid-cap travel firms also saw strong gains, with Easyjet up 6.2 per cent, or 41p, to 703.8p while tour operator Tui jumped 5.5 per cent, or 17.6p, to 339.5p.