Darktrace IPO dealt blow after UBS pulls out over Mike Lynch ties
The UK businessman is embroiled in an ongoing fraud case over his role in HP's takeover of Autonomy in 2011
The £4 billion stock market floatation of Darktrace has been dealt an early blow after Swiss bank UBS reportedly pulled out due to the firm's ties to British entrepreneur Mike Lynch.
The decision came from the bank's compliance department and is related to a 'Suspicious Activity Report' (SAR) regarding Lynch's current legal battles with US and UK authorities, according to Sky News.
A SAR is a regulatory requirement for banks that must be made if there is any suspicious legal activity in a transaction. UBS was appointed alongside US multinational Jefferies to lead Darktrace's listing in November, but the firm has reportedly said it cannot continue on behalf of the UK firm due to Lynch's proposed extradition to the US to stand trial,
Lynch was one of the first investors in Darktrace through his VC firm Invoke Capital, but it is his previous ventures that have led to UBS pulling out and also his potential extradition to America.
In 2011, HP acquired Lynch's UK startup Autonomy for $11 billion - a fee that was said to be "ridiculous" before and during the takeover. The deal was made while HP was under the stewardship of Leo Apotheker, who was fired not long after the acquisition completed due to the firm's poor financial health under his tenure.
Under the scrutiny of new leadership, the Autonomy takeover was found to be "excessive" and questions were raised over the "misrepresentations" of the company's assets and their valuations. Legal proceedings were then brought against Lynch, accusing him of providing fraudulent statements during the sale of his company.
Those legal proceedings are still ongoing and Lynch is also contesting the extradition to the US. What's more, UBS's stance towards the Darktrace IPO is thought to have shifted after a Dutch court ordered its CEO, Ralph Hamers, to face investigations into money-laundering at ING, the firm he ran before leaving for UBS.
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