REG - Chrysalis Invs Ltd - Quarterly NAV Announcement and Trading Update

Chrysalis InvestmentsAnnouncement

31/07/2023 07:00

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RNS Number : 6400H  Chrysalis Investments Limited  31 July 2023

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(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.

 

31 July 2023

 

 

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

 

Quarterly NAV Announcement and Trading Update

 

Net Asset Value

 

The Company announces that as at 30 June 2023 the unaudited net asset value
("NAV") per ordinary share was 136.86 pence.

 

The NAV calculation is based on the Company's issued share capital as at 30
June 2023 of 595,150,414 ordinary shares of no par value.

 

June's NAV represents a 6.84 pence per share (5.3%) increase since 31 March
2023.

 

Movement in the fair value of the portfolio accounted for approximately 9.28
pence per share, with foreign exchange generating an adverse movement of
approximately 2.20 pence per share. Fees and expenses make up the balance.

 

Investment Adviser Comments

 

Richard Watts and Nick Williamson (co-portfolio managers) comment:

 

"It is pleasing to see the NAV increase for a second consecutive quarter. Many
listed peers have materially rerated year to date, and this is beginning to be
reflected in our portfolio valuations. The independent valuation committee is
also gradually moving away from price of recent investment in some instances.

 

We have continued to support and work alongside our portfolio companies, and
we exit the period with a portfolio that is generally trading robustly against
a challenging economic backdrop, and which is largely well-funded.

 

The investment team remains focussed on maximising shareholder value - working
with our portfolio companies towards an IPO or trade sale - and building an
exciting pipeline of investment opportunities, particularly given the
disruption we are witnessing through emerging themes such as generative AI.

 

We are encouraged by the slightly more active IPO market over the last
quarter, particularly as we have several later stage assets that are either
profitable or funded to anticipated profitability and should make excellent
IPO candidates in due course.''

Portfolio Activity

 

Investment activity continues to be focussed on the existing portfolio and the
following transactions took place over the period:

 

·    Early in the quarter, the Company invested £12.5 million in Smart
Pension in a $95 million Series E fundraise led by Aquiline Capital Partners.

 

·    In June 2023, a further £2 million was invested in Tactus to
strengthen its balance sheet, support the refinancing of its bank facilities
and ultimately enable the company to accelerate trading.

 

·    Over the course of June 2023, the company trimmed its position in
Wise following a positive results announcement. The shares were sold at an
average price of 623.24 pence per share. Chrysalis' total cash-on-cash return
on Wise currently stands at 2.9x.

 

Portfolio Update

 

Portfolio growth momentum continues to be strong, particularly in the
Company's larger positions. Focus remains on reaching profitability and
further progress has been made across the portfolio in the quarter, with 85%
of the portfolio either profitable or funded to anticipated profitability.

 

wefox

wefox had a strong first half of the year and is trading ahead of plan.
Progress towards achieving run rate profitability in 2023 remains on track.

 

In May 2023, wefox announced it had secured a $55 million credit facility with
JP Morgan and Barclays, following the second close of its Series D fundraise,
with the funding earmarked to further strengthen the company's insurance and
distribution capabilities and to further develop its technology platform.

 

Following the launch of its global affinity business in early May, wefox has
announced a new partnership with PROPUP, an Austrian proptech start-up. By
partnering with wefox, PROPUP is now able to offer customers access to a wide
range of insurance solutions and advice via its own platform. The affinity
business serves to increase wefox's existing distribution channel, delivering
insurance through partner products.

 

Starling

In May, Starling released its annual financial results for the year to 31
March 2023. Progress has been impressive, with very strong growth in revenue
and profits, assisted by 'Buy to Let' mortgage origination via Fleet Mortgages
and by an increase in yields on cash and debt securities, following increases
in the Bank of England base rate and its impact on wider market yields. Total
revenue for the year was £452.8 million, up 109%, with profit before tax of
£194.6 million, a 6x increase on the prior year.

 

At the same time, after a decade at the helm, Anne Boden announced her
intention to step aside as CEO of Starling. At the end of June, Anne handed
over her responsibilities to John Mountain, who was appointed Interim CEO.
John has been at Starling for seven years as a pivotal member of its executive
team, previously acting as COO.

 

 

 

 

Brandtech

In early June, the company completed the acquisition of Jellyfish, the digital
media and marketing group. The combined group is expected to generate more
than $1 billion in annual revenues, with over 7,000 employees, working for
eight out of ten of the world's largest advertisers, and 49 of the top 100.

 

The company also acquired 100% of Pencil, which operates in the generative AI
marketing space. Built on Open AI's GPT large language models, Pencil
generates channel-ready ads and copy at a significantly lower cost. Pencil
complements Brandtech's existing capability in the AI space.

 

Smart

The filing of Smart's Consolidated Financial Statements in June showed that
revenue in 2022 rose by 32%. Following its recent fundraise, Smart Pension
announced the acquisition of Evolve Pensions in June, paving the way for one
of the largest master trust consolidations of 2023. The merger of Evolve's
master trust, the Crystal Trust, will bring AUM of the Smart Pension Master
Trust to over £4 billion.

 

Following the launch of The Chancellor of the Exchequer's Mansion House
Reforms in July, Smart Pension became a signatory to the Mansion House
Compact, an expression of intent to increase investment in unlisted equities.
The reforms also encourage a merging of smaller pension schemes to allow them
to develop the scale and expertise needed to invest in private equity. Smart
Pension is expected to be a direct beneficiary of the reforms.

 

Klarna

Klarna continues its drive towards profitability, with its 1Q23 results
showing adjusted operating losses falling by over 78% since the same quarter
last year. Lower operating costs, driven by Klarna's cost cutting programme
and improving credit losses, imply that run rate profitability should be
achievable in the second half of the year. The company also continues to grow
strongly with retailer revenues increasing by 17% year-on-year and
outperforming GMV growth of 13% year-on-year.

 

Despite the valuation of the underlying asset being written up in the period,
foreign exchange movements meant the carrying value was slightly marked down.

 

Cash Update

 

As of 30 June, the Company had net cash of approximately £30 million and a
position in Wise of £10 million, to give a total liquidity position of
approximately £40 million.

 

Since the period end the Company has invested a further £6.5 million in
Secret Escapes as part of a wider £31.7 million fundraise to support the
refinancing of existing debt facilities and investment for the next phase of
its growth strategy.

 

 

Portfolio composition

 

As of 30 June 2023, the portfolio composition was as follows:

 

                       30-Jun
                       Carrying Value

 Portfolio Company     (£ millions)    % of portfolio
 wefox                 187.0           22.9%
 Starling              138.3           16.9%
 Brandtech             107.7           13.2%
 Smart Pension         83.2            10.2%
 Deep Instinct         68.7            8.4%
 Klarna                51.1            6.3%
 Featurespace          46.9            5.7%
 Tactus                36.7            4.5%
 InfoSum               26.6            3.3%
 Graphcore             15.9            1.9%
 Secret Escapes        13.2            1.6%
 Wise                  9.9             1.2%
 Sorted                0.3             0.0%
 Gross cash            30.3            3.7%

 

Source: Jupiter Investment Management Limited. 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 £816 million for 30 June
2023.

 

Outlook

 

With equity markets faring better than most people had anticipated year to
date, an improved backdrop for companies looking to IPO is emerging, with a
slight tick-up in IPO activity over the quarter, and with increased
speculation around assets such as ARM listing in New York. The company has
several later-stage assets that are either profitable, or funded to
anticipated profitability, and should make excellent IPO candidates in due
course. The Investment Adviser continues to assess the most appropriate exit
strategy for these assets to optimise investor returns over the medium term.

 

The portfolio companies are largely well positioned, having proactively
managed their cost base and raised the funds necessary to ensure that they can
continue growing strongly and/or achieve profitability. The Investment Adviser
has worked closely with the portfolio companies to achieve this, while
carefully managing the Company's own liquidity position, to enable it to
respond to unforeseen eventualities if they arise.

 

 

Factsheet

 

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

 

-ENDS-

 

 For further information, please contact:

                                                           44 (0) 7976 098 139

 Media                                                     chrysalis@montfort.london

 Montfort Communications

 Charlotte McMullen / Toto Reissland / Lesley Kezhu Wang

 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) 20 3530 3109

 Chris Bougourd

 

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,
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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
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