Tech entrepreneur Mike Lynch is in line for at least £400m as a US private equity fund circles Darktrace.
Dr Lynch, who is battling extradition to the US on fraud charges, holds just over 4.3pc of Darktrace’s share capital, while his wife Angela Bacares holds 8pc.
US private equity firm Thoma Bravo is considering a takeover offer for the cyber security company. Shares in Darktrace surged 26pc on Tuesday after the company issued a “put up or shut up” notice to the would-be bidder.
At current share price levels, Dr Lynch and his family’s Darktrace stake is worth roughly £430m. Investors in Darktrace are expecting any offer from Thoma Bravo to be made at a premium to the current share price, suggesting Dr Lynch and his wife would reap even more from any deal.
Dr Lynch and his family are worth an estimated £988m, according to the Sunday Times Rich List. Around half of that is tied up in Darktrace shares, which have risen around 50pc since its float in April last year.
Converting that paper wealth into cash would provide a welcome boost to Dr Lynch, who faces the looming threat of paying substantial damages to HP.
The British entrepreneur has faced multiple, years-long legal battles over the sale of Cambridge technology company Autonomy to US software giant HP for $11.7bn in 2011.
HP sued Dr Lynch over the disastrous takeover, accusing Autonomy of misrepresenting its sales. The High Court ruled in favour of HP in May and is due to make an award of damages.
HP is seeking $5bn from Dr Lynch, although a High Court judge said at a hearing earlier this year that final damages were likely to be “significantly less”.
Dr Lynch is planning to appeal.
The entrepreneur is also appealing an extradition order over fraud charges in the US, leaving him facing another years-long legal fight.
After the sale of Autonomy, Dr Lynch went on to launch venture fund Invoke Capital, which set up Darktrace. Dr Lynch is no longer involved in running Darktrace.
On Monday evening, Darktrace, which is being advised by bankers Lazard and Jefferies, confirmed it was in “preliminary” talks with Thoma Bravo.
The private equity company now has until September 12 to make a firm offer or walk away.
Cyber security companies have remained broadly resilient amid a wider tech sell-off. Concerns around Russian hacking aggression have boosted sales of cyber defence software.
Hussein Kanji, a partner at Darktrace investor Hoxton Ventures, said on Twitter: “Usually when a private equity firm is making a bid to take a public company private, it’s a sign they feel the company is undervalued.”
He added that he expected Thoma Bravo to take Darktrace private with a view to relisting it in the US, where it could attract a higher valuation.
Darktrace develops a cyber security “immune system” that detects and removes hacking threats to companies. Its clients include BT.
Thoma Bravo previously acquired UK cyber company Sophos for $3.9bn in 2020.