REG - Chrysalis Investment - Propose New Inv Policy New Mgmt Arr. Notice of EGM

Chrysalis InvestmentsAnnouncement

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RNS Number : 7473T  Chrysalis Investments Limited  20 February 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The information contained in this announcement is restricted and is not for
publication, release or distribution in the United States of America, any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.

 

 20 February 2026

 

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

Proposed New Investment Policy, New Management Arrangements and Notice of EGM

 

Extraordinary General Meeting

In December 2025, the Board announced its intention to propose a new
investment policy, together with certain other interrelated matters that would
enable an orderly realisation of the Company's assets to occur over the next
three years.

 

The Company now announces that, further to its previous announcements, an
extraordinary general meeting ("Extraordinary General Meeting" or "EGM")) will
be held at 1.00 p.m. on 24 March 2026 to consider the proposals in connection
with the proposed new strategy of the Company as announced on 19 December 2025
(the "New Strategy").

 

The circular which includes the notice of the EGM (the "EGM Circular) will be
published shortly.

 

The business of the EGM will be to consider and, if thought fit, approve a
revised investment policy (the "New Investment Policy") and changes to the
Company's articles of incorporation (the "New Articles"), each in connection
with the proposed New Strategy.

 

The EGM Circular also sets out details of the Company's proposed new
management arrangements in connection with the implementation of the New
Strategy, as set out below.

 

Rationale for New  Investment Policy

In 2024, the Board had set out a series of measures which it anticipated would
help to address the following issues:

 

The wide share price discount to NAV:

 

The Company has returned over £100m of capital through share buybacks over
the last two years in line with the Capital Allocation Policy ("CAP") adopted
in March 2024. Whilst the discount to NAV has improved, it has not improved
significantly. The Board believes that this persistent level of discount is a
market driven issue but is also, in part, because of the perceived risk of
reinvestment in the Chrysalis strategy.

 

Investment performance:

 

The Company had a portfolio of 12 growth company investments in March 2024. It
was hoped that, by extending the life of the Company by a further three years,
these growth companies would have the chance to develop and their value could
be maximised.

 

This is  still the case for Starling and Smart Pension, which have both
increased in value and hold potential for further growth. However, the
remaining four investments have  not progressed as hoped.

Since inception, the Company has raised £818.3m of external capital (net of
issue costs). As at Q1 2026, the Company had returned approximately £108m to
shareholders through share buybacks and reported a net asset value of
£818.5m, implying total value of approximately £926.5m. This represents a
1.13x total value to paid in capital (TVPI) multiple over approximately seven
years.

 

Overall, the blended subscription price across the shares issued for cash
since inception is approximately £1.45 per share. The Company's current share
price of £0.95 represents a discount of approximately 34% to that blended
subscription price.

 

Based on this historic performance, the Board believes returning capital to
shareholders on realisations is more appropriate than reinvesting in new
investments.

 

Management arrangements would lead to improved resource and capability:

 

At the time of introducing the capital allocation policy, the Board also
entered into a new investment management and advisory agreement with Chrysalis
Investment Partners LLP ("CIP", the "Investment Adviser" or the "IA"), a
vehicle formed by Richard Watts and Nick Williamson, and G10 Capital Limited
as the alternative investment fund manager.

 

It was hoped that, by enabling a spin-out of the IA, CIP would be well
positioned and funded to build out its own regulatory and operational capacity
as communicated at the time. In the Board's view, the IA has not developed its
regulatory and operational capacity as envisaged over this period.

Consequently,  the Board believes that a revised investment policy which does
not provide for any new investments is appropriate. The proposed New
Investment Policy is as follows:

 

"Investment objective

The Company's objective will be to maximise the value of its existing
portfolio over a three-year period (from February 2026) and to make capital
returns to Shareholders upon realisation of investments.

 

Investment policy

The Company's investment policy is to effect an orderly realisation of its
assets in a manner that is consistent with the Company's investment objective
and the principles of good investment management. This process is expected to
include sales of some or all of the Company's assets which may include running
off certain assets in accordance with their timelines for a natural exit. Once
the Company has completed the disposal of its assets, it is intended that the
Company will be put into a voluntary liquidation process.

 

The Company will cease to make any new investments or to undertake any capital
expenditure except:

 

(i)         with the prior written approval of the Board and where, in
the opinion of the Board, in its absolute discretion, the investment or
capital expenditure is considered necessary or desirable to protect or enhance
the value of any existing investment or to facilitate an orderly disposal; or

 

(ii)        where the investment or capital expenditure is required
under contract or applicable law or regulation by the Company or any vehicle
through which it holds its investments),

 

any such investment or capital expenditure being a "Permitted Investment".

 

In normal market conditions, the Company's level of gearing is not expected to
exceed 20 per cent. of the Company's net asset value (calculated at the time
of drawdown) but it is intended that the Company's existing debt facility will
be repaid in full at its maturity (expected to be in September 2026). For the
avoidance of doubt, the Company will not take on any new borrowings.

 

Subject to prior repayment of all amounts owed under the Company's borrowing
facilities from time to time, the net proceeds received from the sales of
assets will be returned to shareholders in an efficient and timely manner, as
the Board considers appropriate, which may include compulsory redemptions,
tender offers or share buybacks, subject to the maintenance of a working
capital buffer to cover the forecast running costs of the Company and an
appropriate provision for investments under i) and ii) above.

 

The level of such buffer will be kept under regular review by the Board. It is
the Board's intention that as investments are sold and the likelihood for
follow on investing reduces, the provision for follow on investing will
reduce.

 

The Company will seek to dispose of listed securities received through IPO, or
make asset disposals, in a manner and timeframe considered to balance the
objective of maximising value and returning capital to shareholders, having
regard to market conditions.

 

Subject to the ability of the Company to make Permitted Investments, any cash
received by the Company that has not been used to repay borrowings prior to
its distribution to the Company's shareholders will be held by the Company as
cash on deposit and/or as cash equivalent securities, including short-dated
corporate bonds or other cash equivalents, money market funds, cash funds or
bank cash deposits (and/or funds holding such investments).

 

The Company may use derivatives for efficient portfolio management and
managing any exposure to assets denominated in currencies other than pound
sterling.

 

Changes to Investment Policy

Any material change to the Company's investment policy set out above will
require the approval of Shareholders by way of an ordinary resolution at a
general meeting and the approval of the Financial Conduct Authority.
Non-material changes to the investment policy may be approved by the Board."

 

Management/advisory arrangements

In light of the proposed changes to the Company's investment policy, the Board
has evaluated options available to the Company in relation to its management
and advisory arrangements. These have included continuing to be advised by CIP
on terms appropriate to the New Investment Policy, being advised by a new
investment adviser and the adoption of a self-managed model.

 

The annual investment advisory fee, currently approximately £4.5 million
under the existing investment advisory arrangement with CIP, was put in place
three years ago to support the development of CIP as an independent entity
with the required resources, structure and processes to manage a multi-asset
growth portfolio which was continuing to assess and make new investments.
Given the New Investment Policy does not envisage new investments and is
focused on realising assets in an orderly manner,  the Board has sought to
secure changes to the investment management and advisory agreement
which more appropriately reflect the New Investment Policy. At the time of
this announcement, the Board's proposals for a new investment management and
advisory agreement have not been agreed to by  CIP.

 

As a result, taking into account the costs to shareholders of the existing
investment advisory arrangements,  the number of holdings in the Company's
portfolio and the expertise available through the Board and third party
consultants (as appropriate) the Board has determined that it would be in the
best interests of shareholders to terminate the existing arrangements with CIP
and the Board has today served protective notice on CIP under the Company's
investment management and advisory agreement (which has a six months' notice
period). For the avoidance of doubt, notice has not been served on G10 Capital
Limited, who will remain as the Company's AIFM for at least that six-month
notice period.

 

Unless other arrangements can be reached with the Investment Adviser during
its six month notice period, the Company's intention after the expiry of that
notice period is to operate with a self-managed model in delivering the New
Investment Policy, continuing to exercise appropriate oversight of its
portfolio companies, including the maintenance of governance and information
rights. In connection with this proposed transition, the Board has been
working with Sam Dobbyn who has today joined the Board as an independent
non-executive director.

 

Sam Dobbyn, who has significant relevant experience most recently at Allied
Minds PLC, will oversee the transition, ensuring continuity of portfolio
oversight, and acting as the central point of accountability between the
Board, the Investment Adviser, and the Company's other advisers. Following the
transition, the Board intends that Sam will lead the execution of the
Company's business plan in respect of key portfolio assets, supported by other
Board members and by external advisers as required.

 

Portfolio oversight, risk management, valuation oversight, regulatory
compliance and financial reporting would continue to be supported by IQEQ/G10
(initially as AIFM as referenced above, and then - should the Company complete
its transition to a self-managed model - in a non-AIFM advisory capacity),
alongside specialist legal and transaction advisers engaged on a case by case
basis. IQEQ/G10 have offered to provide their services to the Board on the
revised approach where they will provide the same risk management and
reporting services on a fixed fee basis.  The Board will continue to discuss
with the IA how it could work within this structure on a mutually acceptable
basis. Given the IA has already received a performance fee, the Board does not
believe a further incentive fee for the IA is appropriate but hopefully other
terms can be agreed.

 

The Board believes that this approach provides appropriate risk control,
expertise, transparency and flexibility while materially reducing the
Company's ongoing cost base. Based on current planning assumptions, the annual
operating cost of the self-managed structure is expected to be materially
lower than the current investment advisory arrangements and is anticipated to
be below £2 million per annum. The Board will retain full oversight of
strategy and disposal decisions and will provide further updates to
shareholders as the transition progresses.

 

New Articles

In connection with the proposed adoption of the New Investment Policy, the
Board is proposing the adoption of the New Articles. The material changes
proposed to be made to the Existing Articles by the adoption of the New
Articles are as follows:

 

·    a change to the date of the Company's next continuation vote, such
that the next continuation vote will be held in February 2029. The purpose of
this amendment is to allow for the expected three-year period of the Company's
strategy to return capital to run its course and avoid a continuation vote
(which would otherwise be held in early 2027) unduly affecting the execution
of the proposed New Investment Policy; and

 

·    the removal of the condition to the Directors' authority to
compulsorily redeem Shares in accordance with the Existing Articles that a
continuation vote is not passed (the "Continuation Vote Condition"). This will
allow the Directors flexibility to use the compulsory redemption mechanism
provided for in the Existing Articles (and the New Articles) at any time to
return capital in accordance with the New Investment Policy where the
Directors deem it to be in the interests of Shareholders to do so. Other minor
amendments have been made to the process for such compulsory redemptions to be
made.

 

UK Resident Shareholders - UK Offshore Fund Rules

If the Proposals are approved by Shareholders, it is expected that this will
result in the Ordinary Shares being treated as an "offshore fund" for the
purposes of UK taxation.

 

As a result, the Directors intend to obtain from HM Revenue & Customs
("HMRC") recognition of the Company's Ordinary Shares as a reporting fund for
the purposes of the UK Offshore Funds (Tax) Regulations 2009 (SI 2009/3001)
(the "UK Offshore Fund Rules"). Details of the date from which such status
applies may be found on the website of HM Revenue & Customs at
http://www.gov.uk/government/publications/offshore-funds-list-of-reporting-funds
(http://www.gov.uk/government/publications/offshore-funds-list-of-reporting-funds)
. There can be no guarantee that reporting fund status will be obtained and/or
maintained for the Shares.

 

Further information on the UK Offshore Fund Rules and its implications for
Shareholders are set out in the EGM Circular.

 

Expected timetable

 Latest time and date for receipt of Form of Proxy (and any accompanying power  1.00 p.m. on 20 March 2026
 of attorney) for the EGM
 EGM                                                                            1.00 p.m. on 24 March 2026

Defined terms used and not otherwise defined in this announcement shall have
the same meaning as in the EGM Circular.

-ENDS-

 

 For further information, please contact:

 Media

 Montfort Communications:                          +44 (0) 7826 547 304

 Charlotte McMullen / Imogen Saunders              chrysalis@montfort.london

 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

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

 Aimee Gontier / Elaine Smeja

 

A copy of this announcement and the EGM Circular will shortly be available on
the Company's website at https://www.chrysalisinvestments.co.uk
(https://www.chrysalisinvestments.co.uk) and submitted to the National Storage
Mechanism (NSM) where they will be available for inspection
at https://data.fca.org.uk/#/nsm/nationalstoragemechanism
(https://data.fca.org.uk/#/nsm/nationalstoragemechanism) . In addition, the
EGM Circular will be available to view at the registered office of the
Company, during normal business hours on weekdays (Saturdays, Sundays and
public holidays excepted) from the date of this document until the conclusion
of the EGM.

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 announcement includes statements that are, or may be deemed to be,
"forward-looking statements". These forward-looking statements can be
identified by the use of forward-looking terminology, including the terms
"believes", "estimates", "anticipates", "expects", "intends", "may", "will",
or "should" or, in each case, their negative or other variations or comparable
terminology. These forward-looking statements relate to matters that are not
historical facts regarding the Company's investment strategy, financing
strategies, investment performance, results of operations, financial
condition, prospects and dividend policies of the Company and the instruments
in which it will invest. By their nature, forward-looking statements involve
risks and uncertainties because they relate to events and depend on
circumstances that may or may not occur in the future. Forward-looking
statements are not guarantees of future performance. There are a number of
factors that could cause actual results and developments to differ materially
from those expressed or implied by these forward-looking statements. These
factors include, but are not limited to, changes in general market conditions,
legislative or regulatory changes, changes in taxation regimes or development
planning regimes, the Company's ability to invest its cash in suitable
investments on a timely basis and the availability and cost of capital for
future investments. The Company expressly disclaims any obligation or
undertaking to update or revise any forward-looking statements contained
herein to reflect actual results or any change in the assumptions, conditions
or circumstances on which any such statements are based unless required to do
so by FSMA, the  UK Listing Rules, the Prospectus Regulation Rules made under
Part VI of the FSMA or the Financial Conduct Authority or other applicable
laws, regulations or rules.

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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