REG - Chrysalis Investment - Quarterly NAV Announcement and Trading Update

Chrysalis InvestmentsAnnouncement

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RNS Number : 0045R  Chrysalis Investments Limited  30 January 2026

The information contained in this announcement is restricted and is not for
publication, release or distribution in the United States of America, any
member state of the European Economic Area (other than to professional
investors in Belgium, Denmark, the Republic of Ireland, Luxembourg, the
Netherlands, Norway and Sweden), Canada, Australia, Japan or the Republic of
South Africa.

 

The information contained within this announcement is deemed by the Company to
constitute inside information as stipulated under the Market Abuse Regulation
(EU) No. 596/2014 which forms part of domestic law in the United Kingdom
pursuant to The European Union Withdrawal Act 2018, as amended by The Market
Abuse (Amendment) (EU Exit) Regulations 2019.

 

30 January 2026

 

 

Chrysalis Investments Limited ("Chrysalis" or the "Company")

 

Quarterly NAV Announcement and Trading Update

 

Net Asset Value

 

The Company announces that as at 31 December 2025 the unaudited net asset
value ("NAV") per ordinary share was 165.36 pence.

 

The NAV calculation is based on the Company's issued share capital as at 31
December 2025 of 494,973,805 ordinary shares of no-par value.

 

December's NAV per share represents a 6.29 pence per share (3.7%) decrease
since 30 September 2025. The decrease in the fair value of the portfolio
accounted for approximately 7.01 pence per share, with foreign exchange adding
a further 0.12 pence per share. The share buyback led to 1.39 pence per share
of accretion; other income, fees and expenses make up the balance.

 

Richard Watts and Nick Williamson, Managing Partners of Chrysalis Investment
Partners LLP comment:

 

"NAV per share fell in the first quarter reflecting the share price weakness
of Klarna since IPO, which has accounted for approximately 4.8 pence of
deterioration; an increase in the valuation of Starling largely offset a
reduction in the value of wefox.

 

Starling hit a major milestone in the period with Engine signing a ten-year
contract with Tangerine Bank to re-platform its two million customers.
Tangerine is a subsidiary of Scotiabank - one of the largest banks in North
America with assets of approximately C$1.4 trillion - and marks the first
"migration" deal of an existing book of business for Engine. Not only is the
scale of this agreement very material to Engine, but we view it as a strong
endorsement of Engine's offering.

 

Smart also saw a major contract win with Hargreaves Lansdown ("HL") for its
Keystone platform offering. This new relationship will see Keystone power HL
Workplace to help "transform the client experience" according to Richard Flint
(CEO of HL). Keystone was chosen due to its proven record of scalability and
flexibility.

 

Operationally, wefox continued to see underlying improvement, but was marked
down in the period, reflecting the introduction of a funding uncertainty
discount, which is addressed below.

 

We continue to work closely with the existing portfolio to assist them to
maximise their valuations, ahead of future realisations."

 

Portfolio Activity

 

There has been immaterial net investment activity in the portfolio over the
period.

 

Elsewhere, the Company continued to enact its Capital Allocation Policy
("CAP"); in particular the second element of this, namely the return of up to
£100 million to shareholders, which has been undertaken in the form of a
share buyback. In November, the Board decided to extend the current buyback
deployment level until the AGM in March 2026.

 

Over the quarter, a further £16.9 million of shares were bought into
treasury, taking the total capital returned to shareholders in excess of the
£100 million originally established (approximately £103 million at period
end), which has subsequently risen to £108 million as of 27 January.

 

Portfolio Update

 

Starling

 

The key news for Starling was Engine's contract win with Tangerine Bank in
November 2025.

 

Tangerine is a multi-award-winning business, with 1,200 employees serving two
million customers. Given its success, the Investment Adviser views its
decision to shift banking platform as strongly supportive of the gains it sees
from migrating to Engine; Tangerine expects Engine will allow it to
"supercharge its client experience and embark on an ambitious new phase of
growth".

 

The Investment Adviser sees this contract win as providing strong evidence to
support Declan Ferguson's (Starling CFO) comment in early 2025 that he saw a
"credible path to £100 million of recurring revenue within two years".

 

In October Starling also launched the UK's first AI tool to combat scams -
Scam Intelligence - that allows customers to upload pictures of ads from
online marketplaces to assess them for fraud. The Investment Adviser sees the
launch of new products and features, as well as the recommencement of
marketing activities - such as the brand refresh in July - as important
drivers of the company as it navigates its exit from certain regulatory
restrictions.

 

In December, Richard Watts was appointed to the board of Starling.

 

Smart Pension

 

WS Stakeholder Pension Scheme (£580 million of AuM) was acquired in November
2025, representing one of the first acquisitions of a stakeholder scheme by a
DC Master Trust. In combination with the Options Master Trust consolidation in
the quarter, Smart Pension Master Trust ("SPMT") AuM rose to over £9 billion
by period end, meaning it expects the £10 billion level will be achieved over
the first half of 2026. Given the Pensions Scheme Bill has £10 billion as an
interim waypoint on its "transition pathway" to £25 billion of assets by
2035, this scale gain is important.

 

The impact of this regulatory change has already been felt in the market, with
the pace of consolidation accelerating in recent months, as evidenced by WTW
being confirmed as the buyer of Cushon (AuM of approaching £4 billion) in
December 2025. The Investment Adviser believes the mooted multiple of revenue
paid for Cushon would support a significant implied valuation for SPMT.

 

SPMT has "inbuilt" growth in the form of significant net annual contributions;
while this underpins organic growth for the division, this could be
significantly accelerated via judicious M&A, which is likely to have
further positive ramifications for its valuation.

 

Keystone also saw positive news flow just post period end in the form of a
deal signed with Hargreaves Lansdown's Workplace business that has teamed up
with Keystone in a "multi-phase technology partnership". The Investment
Adviser sees this win as evidence of the efficiency of the Keystone platform,
which could be particularly attractive to industry participants in a
consolidating market.

 

Klarna

 

Klarna reported 3Q25 results in the period, which showed continued
acceleration in both GMV and revenues, up 23% (1Q 13%; 2Q 19%) and 26% (1Q
15%; 2Q 20%) respectively (year-on-year; like-for-like).

 

Particularly strong performances came from the Klarna Card - which has had
four million signups since July 2025 and now accounts for 15% of global
transactions - and Fair Financing - which grew 244% in the US and has over
twice the transaction margin versus the group average.

 

Despite raising guidance, Klarna's shares traded down over the period from its
$40 per share IPO price to $28.91 at period end and have since weakened
moderately further in 2026.

 

The Investment Adviser has previously highlighted the accounting rules
relating to provisioning of expected losses, which mean that impairment is
frontend loaded. As a result of this, Klarna reported a small loss at the
adjusted operating profit level, versus small positive profits in prior
quarters and year-on-year, due to the acceleration in Fair Financing volumes.
Klarna highlighted that the true "realised losses" being experienced improved
by one basis point to 0.44% of GMV. Klarna expects the impact of this
provisioning to begin to abate in 4Q25, with over $100 million in transaction
margin uplift being booked.

 

As the ramifications of the growth in Fair Financing work their way through
the P&L, as well as the activation of the ability to sell loans from the
balance sheet - thus releasing their associated provisions - the Investment
Adviser expects the profit profile of Klarna to substantially improve, which
is backed up by market forecasts.

 

wefox

 

wefox performed well over 2025, beating its budget and delivering its first
full year of profitability.

 

Although the Group's principal operating subsidiaries in the Netherlands and
Austria are profitable, the terms of the current debt arrangements restrict
the ability to upstream cash from those subsidiaries to the Group level. As a
result, the business is expected to require funding of approximately €12-15
million in total, which, if completed, would provide an extended cash runway
of up to two years and support the execution of the current business plan. The
terms, structure and final quantum of any such funding were still being
considered at the valuation date.

 

Reflecting the Company's requirement for near-term funding and the valuation
sensitivity associated with the outcome of that process, the Valuation
Committee has applied an uncertainty discount to the valuation of wefox. While
the underlying performance of the business has continued to improve, the
valuation at the measurement date was influenced by the need to agree and
execute a funding solution.

 

At the valuation date, the Investment Adviser considers that the necessary
funding and investor consents could be obtained during this quarter. Based on
this, an uncertainty discount has been applied by the Valuation Committee
which could therefore be removed once a transaction has been completed. Any
participation by Chrysalis in providing further funding will be subject to the
Company's investment policy and restrictions in effect at that time, approval
by the Board, and the participation of other investors. As indicated below,
shareholders will be informed if any significant changes arise.

 

Secret Escapes

 

In December, Secret Escapes disposed of its Eastern European business -
Slevomat - to Genesis Capital. While proceeds were not disclosed, the group's
borrowings were repaid, meaning it entered 2026 with substantial unrestricted
cash on its balance sheet to support its core European markets.

 

Cash Update

 

As of 31 December 2025, the Company had gross cash and equivalents of
approximately £85 million, and positions in Klarna and Wise of approximately
£91 million and £3 million respectively, giving a total liquidity position
of approximately £179 million (representing approximately 22% of NAV). The
gross cash position reduced over the quarter largely because of the ongoing
share buyback.

 

The Company had a net cash position of approximately £25 million, once the
£60 million term loan is accounted for.

 

Board Update

Following the Company's announcement on 19 December 2025 regarding the revised
investment policy, which proposes an orderly realisation programme over the
next three years to 2029, the Board has conducted a detailed review of the
funding requirements and governance of the portfolio companies, as well as
considering the optimal structure for managing them in the event the revised
investment policy is approved by shareholders. It is the intention of the
Board to provide further details on its recommended approach on these matters
in the circular to shareholders seeking approval of the new investment policy,
which is expected to be published in February.

To provide the Board with independent input on the portfolio and realisation
considerations, the Board has engaged the consulting services of Sam Dobbyn.
Sam has significant relevant experience of portfolio realisations most
recently at Allied Minds PLC, and during his time as CEO of Urban Exposure
PLC. He was previously Head of Financial Planning and Analysis and Head of
Investor Relations at both TP ICAP PLC and Brit PLC.

The Board has benefitted from Sam's input over the last month in this review
and has offered him (and he has accepted) a board seat subject to approval by
the Guernsey Financial Services Commission.

 

The Investment Adviser has provided a trading update on some of the key
elements of the portfolio above.

 

However at a strategic level, the Board would like to highlight the following;

 

Klarna

 

The Company's holding in Klarna's listed securities is subject to a lock up
until March 9th 2026. Following the shareholder consultation last year, the
Board received guidance that the Company should not be holding listed
securities for investment purposes over the medium term. Consequently, the
Board is taking advice both from the Investment Adviser and other advisers on
an appropriate course of action that would see the disposal of the Company's
holding in a manner and timeframe considered to be value-maximising for
shareholders, with the proceeds, net of disposal costs and any Board-approved
provisions including for debt repayments, of such a disposal being returned to
shareholders in as efficient a manner as possible.

 

wefox

 

The Board and its advisers have worked closely with the Valuation Committee
on the assessment of this investment and agree with the approach that the
Valuation Committee has adopted. At the valuation date, the Board considered,
among other inputs, information provided by the Investment Adviser when it
assessed whether the necessary funding and investor consents could be obtained
during this quarter. However, given the uncertainty around the capital
structure, the Board will continue to monitor developments closely and notify
shareholders should any material changes occur to that position.

 

Portfolio Composition

 

As of 31 December 2025, the portfolio composition was as follows:

 

                                  31-Dec
                                  Carrying Value

 Portfolio Company                (£ millions)    % of NAV
 Starling                         436.0           53.3%

 Smart Pension                     123.5          15.1%

 Klarna                            90.7           11.1%

 wefox                             56.0           6.8%

 Brandtech                         35.2           4.3%

 Deep Instinct                     23.6           2.9%

 Secret Escapes                    15.6           1.9%

 Featurespace                      9.5            1.2%

 Wise                              2.7            0.3%

 Sorted                            0.3            0.0%
 Gross cash and cash equivalents  85.5            10.4%
 Other net assets/(liabilities)   (59.9)          (7.3)%
 Net asset value                  818.5           100.0%

 

Source: Chrysalis Investments Limited. The above percentages are based on a
net asset value of approximately £819 million for 31 December 2025. The
Company's Featurespace investment has been disposed and the amounts remaining
relate to deferred disposal proceeds.

 

Factsheet

 

An updated Company factsheet will shortly be available on the Company's
website:  https://www.chrysalisinvestments.co.uk
(https://www.chrysalisinvestments.co.uk) .

 

 

-ENDS-

 

 For further information, please contact:

 Media                                             +44 (0) 7921 881 800

 Montfort Communications:                          chrysalis@montfort.london

 Charlotte McMullen / Imogen Saunders

 Investment Adviser                                +44 (0) 20 7871 5343

 Chrysalis Investment Partners LLP:

 James Simpson

 AIFM                                              +44 (0) 20 7397 5450

 G10 Capital Limited:

 Maria Baldwin

 Deutsche Numis:                                   +44 (0) 20 7260 1000

 Nathan Brown / Matt Goss

 Panmure Liberum:                                  +44 (0) 20 3100 2222

 Chris Clarke / Darren Vickers

 Barclays Bank PLC:                                +44 (0) 20 7623 2323

 Dion Di Miceli / Stuart Muress / James Atkinson

 Rothschild & Co:                                  +44 (0) 20 7280 5000
 Alice Squires / Tim Brenton / Ahmed Jibril

                                                   +44 (0) 1481 231 852

 IQEQ Fund Services (Guernsey) Limited:

 Aimee Gontier / Elaine Smeja

 

LEI: 213800F9SQ753JQHSW24

A copy of this announcement will be available on the Company's website at
https://www.chrysalisinvestments.co.uk
(https://www.chrysalisinvestments.co.uk)

The information contained in this announcement regarding the Company's
investments has been provided by the relevant underlying portfolio company and
has not been independently verified by the Company. The information contained
herein is unaudited.

This announcement is for information purposes only and is not an offer to
invest. All investments are subject to risk. Past performance is no guarantee
of future returns. Prospective investors are advised to seek expert legal,
financial, tax and other professional advice before making any investment
decision. The value of investments may fluctuate. Results achieved in the past
are no guarantee of future results. Neither the content of the Company's
website, nor the content on any website accessible from hyperlinks on its
website for any other website, is incorporated into, or forms part of, this
announcement nor, unless previously published by means of a recognised
information service, should any such content be relied upon in reaching a
decision as to whether or not to acquire, continue to hold, or dispose of,
securities in the Company.

The Company is an alternative investment fund ("AIF") for the purposes of the
AIFM Directive and as such is required to have an investment manager which is
duly authorised to undertake the role of an alternative investment fund
manager ("AIFM"). G10 Capital Limited is the AIFM to the Company. Chrysalis
Investment Partners LLP is the investment adviser to G10 Capital Limited.
Chrysalis Investment Partners LLP (FRN: 1009684) is an Appointed
Representative of G10 Capital (FRN: 648953) Limited, which is authorised and
regulated by the Financial Conduct Authority.

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