T the award for the most undervalued show of the year goes to Darktrace. The Cambridge-based cybersecurity firm floated in April to 250p. Price now: an astonishing 731p. How is it going ? How does a £ 1.7bn valuation become £ 5bn in five months?
Well the company did her part in providing the trading numbers she said it would, plus a bit more, which clearly improves the mood. The news in Wednesday's first set of annual figures was not the overall loss of $ 149million (£ 108million). This was the second post-float upgrade to the revenue forecast for the coming year.
But the tingle upside in revenue forecast is only a small part of the answer to the sub-evaluation. At the heart of it all seems to have been Darktrace's desperation to get a list as a way to demonstrate his independence from Mike Lynch, the founder of Autonomy (and still 16% shareholder of Darktrace with his wife) struggling. against extradition to the United States for fraud. For state-owned enterprise status, it was ready to accept a significant price discount.
And the other contributing factor was Deliveroo's floating flop on last month. It seems bizarre that investors are pairing a tech company that uses artificial intelligence to detect cyber anomalies (Darktrace) with a company that runs software to organize bicycle couriers (Deliveroo), but sometimes the city is gloriously simplistic. Everything comes together in a big "tech " bucket.
The bottom line is a big win for investors who bought float andTheoretical losers - the old cast of shareholders - probably don't feel too bad because they've only sold a small proportion of their holdings. But the traditional IPO process, overseen by superbly paid city advisers supposedly trained in judging investor demand, looks even dumber than usual.
Encore Rishi Sunak will be delighted if Darktrace also shows that the UK market is not populated by Luddits investors. Promoting the UK as a tech hub is one of the Chancellor's obsessions, even to the point of (foolishly) agreeing to come up with a few ra-ra words to promote the Deliveroo float.
But Sunak addressed a different question earlier this week when asked about the private equity buying frenzy for UK listed companies." I would take that as a sign confidence in the UK. This is good news for our economy, "he replied.
This answer is from depressing banality. Yes, the UK obviously needs to welcome foreign investment, but the current buyout frenzy raises questions Sunak has avoided.
Is this really a good thing that UK companies are seen as sitting ducks by US private equity firms? And the British boards being stretched out? Does the Treasury see no danger to the income of UK companies loaded with cheap debt that can be offset by corporate tax? Sunak would it be trueim relaxed if, say, BT, a company we rely on to build our fast fiber broadband network, was the next target?
That was the same perverse political determination to see each takeover as 'a vote of confidence in the UK' that led Theresa May's government, in its post-Brexit vote confusion in 2016, to bless the pioneer buyout of British technology Arm Holdings by SoftBank of Japan. Now SoftBank is hoping to sell to a US buyer, causing angst in the UK and the wish that Arm is still independent and cited here.
Nothing does not mean that all redemptions must be opposed. Some clearly add value. But, in the age of cheap money, the takeover game isble desperately biased in favor of private equity, which has never been a political ambition. You hope this point will get a nod of recognition. Come on, Chancellor, you don't work for a hedge fund these days.
"Since the reopening, our trading performance has been very good ", states the Restaurant Group , owner of Wagamama and Frankie & Benny 's. Well, yes, it's hard to argue with a 21% increase in like-for-like sales from pre-pandemic levels in 2019.
But the detail behind the sales boost is the interesting bit. It is not a case of more diners. On the contrary, it is less people who spend moreus - by adding more alcohol, for example. It seems to be related to the working from home trend: eating in the early evening has become more popular.
From a restaurant group perspective, all the extras income is obviously welcome. It is on this basis that the group said trading "supports" an increase in likely earnings this year. But you can also see why stocks fell 10%: if fewer people walk through the doors, the recovery looks fragile.