REG - Chrysalis Invs Ltd - Portfolio Update

Chrysalis InvestmentsAnnouncement

11/07/2022 13:30

For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20220711:nRSK0427Sa&default-theme=true

RNS Number : 0427S  Chrysalis Investments Limited  11 July 2022

The information contained in this announcement is restricted and is not for
publication, release or distribution in the United States of America, any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 the Republic of Ireland), Canada, Australia, Japan or the
Republic of South Africa.

 

 

11 July 2022

 

 

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

 

Portfolio Update

 

 

Today, the Company can report that Klarna Holding AB ("Klarna") has announced
an $800m funding round that values the company at $6.65 billion post new
money.

The round, which was larger than anticipated, was led by Sequoia Capital and
has been undertaken at a valuation that represents a material discount to the
Company's current carrying value of the asset. Other investors in the round
include Silver Lake and Commonwealth Bank of Australia, both existing
investors, and new investors such as Mubadala Investment Company and the
Canadian Pension Plan Investment Board.

The Company's Investment Adviser believes the current valuation to be very
attractive, and the Company has therefore committed to its pro-rata
entitlement of $8.7 million. Consequently, the Company will not suffer any
dilution of its holding because of this funding round.

The Company first invested in Klarna in August 2019 at a post-money valuation
of $5.5 billion, with an EV/Sales multiple of approximately 6.7x. In 2019,
Klarna generated revenues of $753m and a +20% rate of growth. The company had
a very strong market position in the Nordics and Germany but had not fully
proven its ability to penetrate some of the largest ecommerce markets
globally, including the US, UK and Asia.

Since our initial investment, Klarna has achieved the following milestones:

·    Revenues have grown from $753 million in 2019 to $1.6 billion in 2021
(+112%).

·    Gross Merchandise Volume (GMV) processed has increased by $45 billion
(to $80 billion).

·    The number of Global Active Users has increased from 60 million to
150 million (+150%).

·    The number of users in the US has increased to 27 million (+700%).

·    The number of merchants using Klarna has increased from 130k to 400k
(+167%).

·    10 new markets have been entered and Klarna is now present in 45
countries globally.

·    The company has acquired Pricerunner, Hero, Inspirock, APPRL and
Stocard.

·    A global partnership with Stripe was announced in October 2021 giving
access to millions more small-to-medium sized businesses.

Over the past three years, Klarna has grown into a global payments business
with a dominant market position in several territories. The company's rate of
growth has accelerated, and the customer and merchant base has expanded
materially. Innovative products and services have continued to be rolled out
across new and growing verticals such as travel, event ticketing, beauty, and
high-frequency verticals such as pharmacy and grocery.

The current valuation of $6.7 billion implies an EV/Sales multiple of
approximately 3.0x; this represents a discount of over 30% to Affirm's
EV/Sales multiple and a 55% derating versus our initial entry valuation. Some
investors view Affirm as Klarna's closest listed peer.

 

Richard Watts (co-portfolio manager) comments:

''The current funding round does not reflect Klarna's progress since our
initial investment, it reflects the very attractive terms that providers of
capital are demanding against the current macroeconomic backdrop. We remain
extremely positive on the outlook and potential of this business and believe
that Klarna now has sufficient capital to reach profitability, whilst
continuing to grow strongly.''

 

Company Update

As announced on 23 May 2022, the Company's net asset value ("NAV") per
ordinary share was 211.76p as of 31 March 2022.

It is estimated that the revised valuation of the Company's investment in
Klarna due to this funding round, along with the movement of listed assets and
FX post-period end, would result in a decrease in the NAV per ordinary share
of approximately 32p as compared to the Company's last reported NAV per
ordinary share. The resulting NAV would therefore be 179.50p

Note that 45% of the portfolio is currently profitable and 51% of the
portfolio is now either profitable or has sufficient cash to reach
profitability. The remaining 44% of the portfolio, excluding cash, has
approximately 15 months of runway without raising further capital.

 

Cash Update

As of 7 July 2022, the Company held approximately £51m of cash. In addition,
the Company also has significant further liquidity available, most notably its
holdings in listed assets, which currently total approximately £64m.

 

Portfolio Composition

As of 7 July 2022, the portfolio composition was as follows:

 

 Portfolio Company    % of portfolio
 Starling             25.1%
 Wefox                13.3%
 Smart Pension        10.6%
 The Brandtech Group  10.5%
 Graphcore            6.1%
 Klarna               5.5%
 Featurespace         3.8%
 Tactus               3.7%
 InfoSum              3.3%
 Deep Instinct        3.2%
 Sorted               2.7%
 Wise                 2.3%
 Revolution Beauty    1.9%
 THG                  1.7%
 Secret Escapes       1.5%
 Growth Street        0.0%
 Rowanmoor            0.0%
 Cash                 4.8%

 

Source: Jupiter Investment Management Limited. Holding sizes, as of 7 July
2022, are calculated using 31 March valuations, adjusted for FX as of 7 July
2022 and capturing transactions concluded post the NAV calculation period, and
thus using cash as of 7 July. For listed shares, the holding values are based
on closing share prices as of 7 July, namely: THG at 82p; Wise at 351p; and
Revolution Beauty at 73p. Due to rounding the figures may not add up to 100%.
The above percentages are based on an aggregate portfolio value (including
cash) of approximately £1.07 billion.

 

-ENDS-

 

 

 For further information, please contact

 Media

 Montfort Communications                                   +44 (0) 7542 846 844

 Charlotte McMullen / Georgia Colkin / Lesley Kezhu Wang   chrysalis@montfort.london

 Jupiter Asset Management:                                 +44 (0) 20 3817 1696

 James Simpson

 Liberum:                                                  +44 (0) 20 3100 2000

 Chris Clarke / Darren Vickers / Owen Matthews

 Numis:                                                    +44 (0) 20 7260 1000

 Nathan Brown / Matt Goss

 Maitland Administration (Guernsey) Limited:               +44 (0) 1481 749364

 Elaine Smeja / Aimee Gontier

 

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.

 

 

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
 or visit
www.rns.com (http://www.rns.com/)
.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
.   END  PFULFLFFLDLFBBE