Sophos, one of the world's largest IT security software developers, has pulled the flotation of the company on the London Stock Exchange due to the current turbulent market conditions, a move that represents a significant blow for the UK technology sector.
Sophos is the latest software developer to cancel its IPO as a result of the market turbulence, with SmartStream and CambridgeSoft already pulling flotations. There seems to be little appetite for mid-cap growth stocks, particularly in the technology sector and it is likely that a number of other IPOs could be pulled following Sophos's decision.
Steve Munford, the Sophos chief executive, said: "We are very disappointed to postpone our IPO due to the market conditions, but our business is strong. The IPO was a stepping stone for growing the company, but luckily with 100m on the balance sheet, we don't need the cash."
Ajit Nedungadi, of TA Associates, which owns a 20 per cent stake in Sophos, said: "We are disappointed at the state of the UK markets, but this is a company that has got options. I suspect a lot of other deals will be pulled as a result of this as this deal can always get done."
He said despite receiving a positive reaction from interested investors, many are taking a conservative view because of the weakness of the market, and Sophos was not prepared to cut its valuation just to get the IPO away, given the strength of its balance sheet and growth prospects.
The move comes as a surprise, given that Sophos is considered a good-quality company in a high-growth market one of the most attractive investment opportunities in the private sector. The company develops software that protects its customers from hacking, viruses and spam attacks.
It was founded in 1987, and was expected to fetch a valuation of up to 500m through the flotation. The 100m that was to be raised was via a secondary offer, as the founders and existing shareholders look to realise value from their holdings.
Join our new commenting forum
Join thought-provoking conversations, follow other Independent readers and see their replies