ALEX BRUMMER: Darktrace’s smooth arrival on the London Stock Exchange will be encouraging for the next few IPOs on the slipway
The key to successful tech floats is the quality of intellectual property. If investors believe in the solidity of the science behind the company, it will go a long way when they get to market.
Darktrace passed this credibility test with its London float despite the backlog of support from Invoke, the investment vehicle of Mike Lynch, the autonomy tycoon fighting extradition to the United States.
The company has learned important lessons from the hyped Deliveroo float. Initial hopes of a valuation close to £ 3 billion were sensibly pushed aside by founder and CEO Poppy Gustafsson, a refugee from the autonomy.
By using second tier investment bankers, Jefferies and Berenberg, in place of the bigger names of Goldman Sachs and JPMorgan who were involved in the Deliveroo imbroglio, grandiosity was avoided.
Success: The key to successful tech floats is the quality of intellectual property
Darktrace uses artificial intelligence developed by Cambridge to help customers detect cyber attacks and unusual behavior from within.
It is not alone in this universe. Israel’s Varonis Systems, quoted on Nasdaq, counts Microsoft and the Pentagon among its customers. It uses brilliant technology that scans email and other systems looking for fraudulent behavior.
Early Deliveroo investors received a bond due to the herding behavior of corporate governance experts among long investors in the UK.
However, it’s likely that some of the individual fund managers will decide at some point that concerns about the working conditions of Deliveroo drivers are being exaggerated.
There is a tendency to forget that Amazon stocks, which were first quoted at $ 1.73 (£ 1.26) in May 1999, also initially dodged on ethical grounds. Investors disapproved of the destruction of the bookstores and the impairment of the pricing power of the publishers. Amazon shares are now trading at $ 3,471.31 (£ 2,534) each on the latest streaky first quarter results.
That doesn’t mean Deliveroo will be the next Amazon. To do this, new, more powerful sources of income would have to be found, as Jeff Bezos did with cloud computing. But, as Kingfisher boss Thierry Garnier pointed out in his Daily Mail interview this week, the final winners in e-commerce are the companies with the fastest turnaround times from order to door. Deliveroo is good at it.
Darktrace’s smooth arrival on the London Stock Exchange will be encouraging for the next few IPOs on the slipway. Broker Numis estimates there could be up to 25 floats of a decent size weighing a London launch.
The fintech company Wise, which has been profitable for several years, is one of the bigger hopes. It is transforming the overseas payments market by charging a small 0.4 to 0.5 percent transparent fee and removing the greedy 3 to 4 percent turn that some banks make on currency transactions.
There’s no shortage of unicorns waiting for a market debut.
In line with the other UK high street banks, Barclays had a good first quarter. CEO Jes Staley’s trust in investment banking is rewarded again.
Barclays is the only European financial group keeping up with the Wall Street giants by getting a fair share of IPO and trading income.
Retail banking also did well, aided by Chancellor Rishi Sunak’s breaks for homebuyers and booming credit card lending.
Provisions: Unlike HSBC, Lloyds and Natwest, Barclays has decided not to convert funds from bad debt provisions back into profits
Despite the bank fire on all cylinders with a return of over 10 percent better than forecast earnings and Staley’s optimistic words, stocks fueled.
Nobody can be sure that the IPOs, bids and deals, as well as the market upswing, will be sustained. Unlike HSBC, Lloyds and Natwest, Barclays chose not to convert any bad debt provisions back into profits despite an economic boom in the UK. It’s not clear if Barclaycard will do as well as the economy opens up and better-off consumers dip into their savings to spend.
This can all be excessive caution. But as the financial crisis has shown, a strong balance sheet is a virtue when the tide runs out.
Wounds from Astrazeneca’s vaccination problems with the EU would have benefited from the socially distant personal diplomacy of his French director-general Pascal Soriot. Instead, he chose to stay in Sydney with his family despite the murmurs of unrest on the board. The irritation can be dampened by buoyant sales in China, advances in breakthrough cancer drugs Lynparza and Imfinzi, and stocks rising 4.3 percent. Even so, Soriot should end the drift and catch the next flight.