REG - Chrysalis Investment - Quarterly NAV Announcement and Trading Update

Chrysalis InvestmentsAnnouncement

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RNS Number : 0302D  Chrysalis Investments Limited  05 May 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The information contained in this announcement is restricted and is not for
publication, release or distribution in the United States of America, any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.

 

5 May 2026

 

 

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

 

Quarterly NAV Announcement and Trading Update

 

Net Asset Value

 

The Company announces that as at 31 March 2026 the unaudited net asset value
("NAV") per ordinary share was 137.27 pence.

 

The NAV calculation is based on the Company's issued share capital as at 31
March 2026 of 482,873,805 ordinary shares of no par value.

 

March's NAV per share represents a 28.1 pence per share (17.0%) decrease since
31 December 2025, this movement largely reflects the performance of global
equity markets over the period, with 30th March representing the year to date
low for NASDAQ and the S&P 500. These indices have recovered by 16.7% and
10.7% respectively since that date. The operational performance of the
portfolio is generally strong, particularly at Starling, Smart, and wefox.

 

The decrease in the fair value of the portfolio accounted for approximately
28.5 pence per share, with foreign exchange adding 0.4 pence per share. The
share buyback led to 0.9 pence per share of accretion; fees and expenses make
up the balance.

 

Starling and Klarna accounted for the majority of the write down over the
period. Starling's carrying value on a pence per share basis fell by 12.4p
while Klarna fell by 10.2p. The movement in these two assets accounted for
22.6p of the 28.1p decline.

 

For Starling, the comparable peer group used fell approximately 20% over the
period due to conflict in the Middle East and its impact on equity markets;
given the strong operational momentum at Starling, including a fourth Engine
contract win announcement with SBS Bank (New Zealand), this downward move was
not fully reflected in Starling's valuation.

 

Following positive regulatory engagement, Starling has lifted a number of
onboarding controls in relation to the restrictions that have been in place,
which have had a corresponding positive impact on onboarding customer and
underlying user growth.

 

Klarna's share price declined by 56% over the period which was driven by
various factors. Equity markets were impacted by geopolitical tensions, the
potential implications and disruption of AI, and broader concerns around the
macroeconomic environment.  In addition to this, Klarna downgraded its profit
guidance for 2026, which was largely driven by the accounting treating of its
fair financing product. Growth metrics however remain very strong and GMV
growth of +32% was better than expected over Q4 2025.

 

The Company completed a €7 million investment in wefox post period end, as
part of a larger funding round with participation from a number of existing
investors. As a result of this investment, the uncertainty discount has been
removed from the valuation, this was largely offset by other valuation
metrics. As a result of improved economics negotiated through the recent
investment, the Company benefits from strong downside protection and higher
gross proceeds at lower equity valuations. The unrestricted group within wefox
Holdings should now have a cash runway to approximately the end of 2027 as a
result of this funding round.

 

 

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

 

"The decline in NAV over the period, largely reflects the movement in
comparable peer groups rather than the operational progress and performance of
our portfolio companies.

 

Starling's new advertising campaign commenced in April, and we believe that
the early signs in terms of growth are encouraging, with new customer numbers
up over 100% year-on-year since marketing spend accelerated. We were also
highly encouraged to see Starling announce a fourth contract win with SBS Bank
in New Zealand, further demonstrating the momentum of its software
proposition.

 

Despite Klarna's material derating over the period, we remain highly
encouraged by the growth of Klarna and the traction of its products,
particularly its fair financing product. We remain confident that Klarna has
built a highly profitable business model, and we believe that we will see a
marked acceleration in profitability once the growth in fair financing, and
the accounting treatment of that product, moderates. It was also highly
encouraging to see the Klarna Board Chair (Michael Moritz) acquire $50m of
shares during the period.

 

Post period end, we led a funding round at wefox, committing €7 million as
part of larger funding round which should give the unrestricted group an
operating runway to around the end of 2027, when combined with the agreed cost
reduction programme.

 

We continue to work closely with our portfolio companies and are assisting
them in preparing for a successful exit and maximising their future
valuations.''

 

 

Portfolio Activity

 

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

 

As mentioned last quarter, wefox required €12-15 million to extend its cash
runway; Chrysalis made a €3 million (£2.6 million) investment early in the
period as part of this requirement, which is in addition to the €7 million
investment referenced above.

 

Elsewhere, there was a release from escrow of Featurespace consideration of
approximately £4.8 million.

 

Over the period, the Company continued to buy back shares, with 12.1 million
shares bought into treasury for an approximate cost of £12.3 million. Since
initiating the buyback programme, a total of £115.5 million has been returned
to shareholders, which has subsequently risen to £117.0 million as of as of
28 April.

 

 

Portfolio Update

 

Starling

 

Starling saw a number of new product launches over the period. These included
its third AI customer solution - Starling Assistant - which is the UK's first
agentic AI tool to help consumers manage day-to-day finances and a "Making Tax
Digital" tool for its SME base.

 

In April, Starling rolled out its largest ever brand campaign across multiple
formats, including TV, out-of-home, video-on-demand and social media. The
campaign is expected to run for two months and is part of a customer
activation drive, following its brand refresh in September 2025 and its new
"Good with Money" message.

 

Raman Bhatia - Starling CEO - commented on LinkedIn that the impact of this
marketing campaign had seen an "…incredible increase in new customers, up
over 100% compared to this time last year."

 

Starling now has in excess of £500m of surplus capital on its balance sheet
which represents significant strategic optionality.

 

Smart Pension

 

As announced last quarter, Keystone signed a multi-phase technology
partnership agreement with Hargreaves Lansdown's Workplace business. Keystone
has a robust pipeline of potential clients.

 

Following continued growth in contributions, and the integrations of certain
acquisitions through 2025, SPMT surpassed £10 billion of AUM as of mid-April
2026. This compares to approximately £2.1 billion of AUM at the end of 2021,
implying a 5x increase over the last four years.

 

The UK pensions market continues to consolidate. In April, it was announced
that Standard Life had bought Aegon UK for £2 billion, which includes the
Aegon Master Trust, one of the biggest in the market. Cushon was also recently
acquired by WTW.

 

Klarna

 

While the difficult market backdrop - in particular the selloff of SaaS names
considered to be at risk from AI, which spread into other tech areas - drove
most of Klarna's underperformance over the quarter, its reduced guidance for
2026 at the 4Q25 results was also a concern for investors.

 

Growth over 4Q25 was better than expected, with GMV growing 32% year-on-year
(versus expectations of 30%) and revenue up 39% (versus 37% expected);
however, transaction margin dollars ("TMD", equivalent to gross profit) came
in at $372 million (up 18%) versus expectations of c$394 million (up 25%). The
miss on TMD was a result of product mix shifting more towards Fair Financing
products versus BNPL; as previously discussed, IFRS requires upfront
recognition of expected lifetime impairments, making Fair Financing loans
unprofitable in their month of origination. As such, the Investment Adviser
sees this more as a timing issue, rather than one of fundamental lower
profitability. While the shares have recovered somewhat from their lows post
the 4Q25 results, the Investment Adviser believes investors will want to see
evidence of Klarna meeting its revised trajectory before the shares have a
chance of rerating. If investors get this comfort, then the outer years'
valuation multiples potentially look highly attractive.

 

Wefox

 

Trading at wefox has been robust year to date, with profit tracking slightly
ahead of budget. This is encouraging following the Company's first full year
of profitability in 2025.

 

TAF, which is the largest asset within the group, continues to perform
strongly and there now lies an opportunity to drive equity value with the TAF
business, particularly as TAF looks to expand into new product categories and
countries.

 

 

Cash Update

 

As of 31 March 2026, the Company had gross cash and equivalents of
approximately £28.2 million, and positions in Klarna and Wise worth
approximately £41.8 million and £2.7 million respectively, giving a total
liquidity position of approximately £72.7 million.

 

The change in cash over the period was mainly due to debt repayment
activities, which accounted for £44.5 million, as well as the buyback, which
accounted for £12.6 million, and the modest investment activity referenced
above.

 

The Company had a net cash position of approximately £10 million, once the
remaining £17.2 million term loan is accounted for.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Portfolio Composition

 

As of 31 March 2026, the portfolio composition was as follows:

 

                                  31-Mar
                                  Carrying Value

 Portfolio Company                (£ millions)    % of NAV
 Starling                         374.7           56.5%

 Smart Pension                     123.5          18.6%

 wefox                             55.9           8.4%

 Klarna                            41.8           6.3%

 Brandtech                         26.2           4.0%

 Secret Escapes                    15.9           2.4%

 Deep Instinct                     7.0            1.1%

 Featurespace                      4.7            0.7%

 Wise                              2.7            0.4%

 Sorted                            0.3            0.0%
 Gross cash and cash equivalents  28.2            4.2%
 Other net assets/(liabilities)   (18.1)          (2.7)%
 Net asset value                  662.9           100.0%

 

Source: Chrysalis Investments Limited. 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:

 Dominic Williams

 Deutsche Numis:                                                         +44 (0) 20 7260 1000

 Nathan Brown / Matt Goss

 Rothschild & Co:                             +44 (0) 20 7280 5000

 Alice Squires / Tim Brenton / Ahmed Jibril

 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

 IQEQ Fund Services (Guernsey) Limited:                                  +44 (0) 1481 231 852

 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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