REG - Chrysalis Investment - Quarterly NAV Announcement and Trading Update

Chrysalis InvestmentsAnnouncement

Thu 07:01

For best results when printing this announcement, please click on link below:
https://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20250508:nRSH7694Ha&default-theme=true

RNS Number : 7694H  Chrysalis Investments Limited  08 May 2025

The information contained in this announcement is restricted and is not for
publication, release or distribution in the United States of America, any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.

 

8 May 2025

 

 

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

 

Quarterly NAV Announcement and Trading Update

 

Net Asset Value

 

The Company announces that as at 31 March 2025 the unaudited net asset value
("NAV") per ordinary share was 152.62 pence.

 

The NAV calculation is based on the Company's issued share capital as at 31
March 2025 of 542,192,153 ordinary shares of no par value.

 

March's NAV per share represents a 4.0 pence per share (2.6%) decrease since
31 December 2024. The decrease in the fair value of the portfolio accounted
for approximately 4.3 pence per share, with foreign exchange generating a
headwind of approximately 1.7 pence per share. The share buyback led to 2.4
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:

 

"Overall, the portfolio continues to perform well. The top five assets now
account for 81% of net assets (85% of the portfolio) mainly due to the sale of
Graphcore and Featurespace. Following the recent restructuring at wefox, all
of the top five assets are now operating at breakeven or are profitable,
resulting in 88% of the portfolio being profitable versus 44% in the prior
year; this reflects the proactive measures our investee companies have taken.

 

Shortly post period end, the sale of InfoSum to WPP plc was announced at a
16.4% uplift to the Company's December carrying value, equating to an increase
in NAV of approximately 1.2 pence per share. The Company has now received
proceeds of approximately $63 million (£49 million), which significantly
improves its liquidity position.

 

We continue to see a substantial opportunity to grow NAV over the coming
years, driven by the performances of the major assets, which are well placed
to capitalise on various growth opportunities and structural tailwinds.
Starling remains the largest position within the portfolio, and we believe the
company has multiple levers for growth, some of which have the potential to
transform its valuation basis.

 

While it is disappointing that recent stock market volatility has delayed the
IPO of Klarna, we do not believe these conditions will have a detrimental
impact on its financial performance, placing it in a good position to float
when uncertainty abates.

 

The Company currently has a gross liquidity position of approximately £153
million, equating to £83 million, net of the Barclays loan facility; these
figures represent 30% and 16% of the Company's current market capitalisation."

 

Portfolio Activity

 

Chrysalis invested $3 million (c£2.4 million) into InfoSum in the period, as
part of a dual track process involving a potential equity funding round and a
trade sale. This investment generated a return for Chrysalis of over $6
million within approximately two months.

 

Over the period, the Company bought back approximately 25 million shares at an
average share price of 100.5 pence, resulting in a total cost of £25.1
million. This led to 2.4p of positive accretion to NAV (circa 1.5% increase in
NAV per share versus December 2024); as of 6 May 2025, the Company had spent
£57.3 million on buying back shares.

 

Portfolio potential

 

The Investment Adviser continues to work with the portfolio companies to
maximise their potential, which it sees as a likely key driver of future share
price performance. The Investment Adviser is currently most focused on the
development of the assets comprising its top five positions, as below.

 

To that end:

·    Starling should have a substantial opportunity to accelerate growth
in its core UK market over the coming year, as well as the potential to
monetise its technology through Engine, its banking-as-a-service proposition.

·    Klarna has recently announced partnerships with a number of strategic
partners, ranging from ApplePay to Walmart. The Investment Adviser believes
these will enable the company to continue to grow robustly in the coming
years.

·    Smart Pension is optimistic about potential regulatory changes in the
UK, which should accelerate consolidation of the market. In addition, it also
has significant opportunities to monetise its technology via its Keystone
product.

·    Brandtech continues to win awards for its Gen-AI capabilities. The
application of Gen-AI to marketing is likely to lead to significant shifts in
the industry and Brandtech should be well positioned to capitalise on them.

·    The restructuring of wefox has enabled the Investment Adviser to
enhance downside protection and reduce valuation risk. In addition, with the
completion of the recent funding round, wefox now has a strong liquidity
position and is well placed to continue growing organically and consolidating
the MGA market across various territories.

 

Successful delivery of these investment opportunities is likely to be
transformational to the Company's returns and drive significant NAV
progression over the medium-term.

 

Portfolio Update

 

Starling

 

Starling's valuation was broadly unchanged over the period.

 

In January 2025, Starling Bank made notable additions to its executive team,
with Joe Gordon appointed as the new Chief Operating Officer (COO), and Raghu
Narula joining as Chief Banking Officer from NatWest Group. These appointments
are part of CEO Raman Bhatia's efforts to strengthen the bank's leadership
team following his own appointment in March 2024.

 

As of February 2025, Starling Bank discontinued interest payments on personal
current account balances; previously, the bank offered a 3.25% interest rate
on balances up to £5,000. To provide an alternative for savers, Starling
introduced an easy-access savings account with a 4% interest rate; by March
2025, Starling said this "Easy Saver" account had reached £1.5 billion in
deposits.

 

In March 2025, Starling Bank, along with partners GFT and Salt Bank, received
multiple awards for their collaboration in developing Romania's first fully
digital banking platform. The accolades included wins at the FS Tech Awards
and the Fintech Breakthrough Award, highlighting their leadership in digital
banking innovation.

 

Smart Pension

 

The carrying value of Smart was unchanged in the period.

 

In March 2025, Smart Pension announced it had surpassed 1.5 million members in
its Master Trust, marking a significant increase in its customer base. In
addition, the company was featured in The Times' list of top software
companies, ranking 37th with an annual sales growth of 92% over three years.
This acknowledgment highlights the company's significant expansion and its
role as a major workplace pension provider in the UK.

 

Smart Pension also shared its thoughts on the Chancellor's Pensions Investment
Review: the company welcomed the consultation and its proposals, particularly
those aimed at making it easier for legacy contract-based schemes to
consolidate, as long as competition is not restricted.

 

The Investment Adviser believes that the proposals as drafted are likely to
lead to further consolidation in the industry, which should be beneficial to
Smart, due to the efficiencies inherent in its technology platform. This
should lead to an encouraging back drop for the Smart Pension Master Trust,
which already has assets under management of over £6 billion.

 

Klarna

 

The value of Klarna fell in the period as a result of decreases in the
valuations of listed peers.

 

In March, Klarna publicly filed a registration statement with the U.S.
Securities and Exchange Commission for a proposed IPO. In early April, Klarna
decided to pause its IPO plans due to market volatility, following the Trump
administration's announcement of new trade tariffs, which led to significant
market instability. Despite this, the Investment Adviser considers the company
to still be 'IPO ready'.

 

The spate of recent relationship announcements continued, with DoorDash
integrating Klarna's buy-now-pay-later (BNPL) payment options into its
delivery app, allowing customers to pay for orders in instalments. In
addition, Klarna has teamed up with OnePay to offer instalment loans to
Walmart's customers in the US, a market which generated $462 billion of
revenue for the latter in the year to January 2025.

 

The Investment Adviser believes relationships of this nature are likely to
enable Klarna to continue growing GMV at rates well above that of general
e-commerce and should help it to sustain these rates of growth for longer than
otherwise would be the case.

 

Shortly post period end, Klarna marked the one-year anniversary of its
subscription service, Klarna Plus, in the U.S. The service, which offers
members exclusive benefits and savings, averaged nearly 35,000 signups per
month since its launch in January 2024.

 

Brandtech

 

Brandtech saw a decrease in carrying value, due to falls in the valuations of
listed peers.

 

In collaboration with Google, Brandtech hosted an event at Google's St. John's
Terminal in New York City in January, declaring 2025 as "The Year of Tectonic
AI Disruption." The event showcased advancements in Gen-AI and their
implications for the marketing industry. The Investment Adviser attended a
similar event at Google's UK HQ, which highlighted the significant advances
made over the last year in AI-generated content.

 

Brandtech managed to generate advertisements via AI for a group of key clients
in early 2025 greater than 60% faster, more than 50% cheaper and with circa
40% better return on investment, versus traditional means. Currently, the
company estimates only 1% of ads are created via Gen-AI globally.

 

Brandtech also announced a collaboration to integrate Google's
video-generation model, Veo 2, into its generative AI marketing platform,
Pencil. This integration aims to provide clients with advanced video
generation tools, enhancing the efficiency and quality of AI-driven content
creation. Additionally, Japan Airlines leveraged this partnership by deploying
Veo 2 and Google's Gemini models to enhance passenger experiences. Select
flights featured AI-generated films showcasing Japanese destinations, created
in under 15 hours by teams from Brandtech's Jellyfish and Pencil units.

 

These developments underscore Brandtech's commitment to integrating
cutting-edge AI technologies into marketing solutions, which the Investment
Adviser believes underpins the company's claim to be the leader in Gen-AI
marketing.

 

wefox

 

wefox was written up in the period, reflecting the terms of the recent funding
round.

 

In January, wefox Insurance AG transferred a run-off portfolio-including motor
damage, third-party liability, private liability, and property business across
Germany, Italy, and Switzerland-to DARAG, a legacy acquirer focused on the
European and UK markets. In addition, wefox Holding AG agreed to sell its
Liechtenstein-based insurance carrier, wefox Insurance AG, to a consortium of
Swiss companies led by BERAG, an independent Swiss pension service provider.
These disposals reflect the ongoing strategic realignment of wefox Group
towards insurance distribution.

 

With new management and funding, the Investment Adviser is cautiously
optimistic that wefox can build a valuable European business.

 

Cash Update

 

As of 31 March, the Company had gross cash and equivalents of approximately
£114 million and a position in Wise of approximately £3 million, to give a
total liquidity position of approximately £117 million. The gross cash
position decreased over the quarter as a result of the ongoing share buyback
being pursued by the Company.

 

Portfolio Composition

 

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

 

                                  31-Mar
                                  Carrying Value

 Portfolio Company                (£ millions)    % of NAV
 Starling                         271.0           32.8%

 Klarna                            125.7          15.2%

 Smart Pension                     123.4          14.9%

 wefox                             86.1           10.4%

 Brandtech                         62.5           7.6%

 InfoSum                           48.9           5.9%

 Deep Instinct                     34.8           4.2%

 Secret Escapes                    19.0           2.3%

 Featurespace                      10.5           1.3%

 Wise                              2.8            0.3%

 Sorted                            0.3            0.0%

 Graphcore                         0.1            0.0%
 Gross cash and cash equivalents  113.7           13.7%

 

Source: Chrysalis Investments Limited. The above percentages are based on a
net asset value of approximately £827 million for 31 March 2025 and include
deferred proceeds receivable on sold investments.

 

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

 Montfort Communications (Media):         +44 (0) 7921 881 800

 Charlotte McMullen / Imogen Saunders     chrysalis@montfort.london

 Chrysalis Investment Partners LLP:       +44 (0) 20 7871 5343

 James Simpson

 G10 Capital Limited (AIFM):              +44 (0) 20 7397 5450

 Maria Baldwin

 Panmure Liberum:                         +44 (0) 20 3100 2000

 Chris Clarke / Darren Vickers

 Deutsche Numis:                          +44 (0) 20 7260 1000

 Nathan Brown / Matt Goss

 IQEQ Fund Services (Guernsey) Limited:   +44 (0) 1481 231852

 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 who 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 is an appointed representative of G10
Capital Limited which is authorised and regulated by the Financial Conduct
Authority.

 

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  MSCQDLFBEELXBBZ