Chrysalis Investments Share Discussion Threads

[peterrr3] 15/1/2025 20:01

Big deal for Klarnahttps://www.cnbc.com/2025/01/14/klarna-scores-global-payment-deal-with-stripe-ahead-of-blockbuster-ipo.html

[craigso] 11/1/2025 16:55

I'm not sure whether I've seen any confirmation that Klarna will be raising new money through an IPO, or whether it will be more of a direct listing allowing current shareholders to sell.

If it's a new money IPO, the existing shareholders will probably be locked in for awhile to avoid the share price tanking.

[speedsgh] 11/1/2025 15:45

Will CHRY retain some/all of their Klarna shareholding post IPO or will they use the IPO as an opportunity to exit completely? I think I would be more comfortable with the latter as more often than not the share prices of newcomers to the market seem to disappoint.

Comment in FT article today on fintech IPOs...



... Most of the new listing candidates are relatively mature — Klarna is already 20 years old — and have shown at least a path to profitability, if not regular cash generation. That sets them up better for an environment where public-market investors are more wary of cash burning start-ups. There are also now more listed competitors to benchmark against, which should make it easier to agree a fair value.

However, private backers who overpaid during the mid-pandemic bubble will be pushing for aggressively high pricing to reduce their losses. Public investors starved of good IPOs for three years should be wary of accepting a bad deal. Traditional finance may have been disrupted, but the incentive to overprice new stock issues remains as strong as ever.

[nigelpm] 11/1/2025 13:14

What's the discount at the moment - c.30%? That's not particularly exciting.

[craigso] 11/1/2025 09:52

Nice to see that wefox has been written down to a point where it should no longer be a ticking time bomb for CHRY's NAV.

Also worth noting that the uptick in NAV per share is before any accretion from the share buyback programme, which only started in earnest after period end.

In my experience, "managed wind down" is a recipe for value destruction (advisor fees, etc.) and impatient shareholders dumping the shares. But if the market doesn't trust CHRY to reinvest money wisely, then it's really the only choice. (even though I'm quite happy to have a traded entity which is mostly a proxy for Starling)

That said, I don't know why the assumption is that a Klarna IPO = selling the Klarna shares on the market. Having visibility on 15% of NAV - and much more if Starling IPOs - might also help narrow the discount.

[nil of] 11/1/2025 09:10

Too late it’s going into wind down

[nil of] 11/1/2025 09:09

The writing is on the wall. AVIs 15% stake plus other activists on the register. The chairman isn’t making these comments unless he has had conversations. It’s going into wind down and it’s all part of the cycle

[grahamg8] 10/1/2025 17:18

I get the point about a gradually shrinking business. However while new investments achieve scale they would presumably be valued by the market at a discount, possibly a bigger discount to the existing portfolio of more mature businesses. The end result could mean maintaining a discount to NAV for longer rather than cutting it.

[speedsgh] 10/1/2025 15:35

Chrysalis must avoid ‘de facto’ wind-down after Klarna payday -

... In full-year results, chair Andrew Haining said a Klarna initial public offering (IPO) ‘would not only provide the company with significant further liquidity, but could result in an uplift to the current valuation’.

While the IPO will clearly be positive for the fund, Chrysalis will find itself at a crossroads over whether to return a significant sum to shareholders – extending the capital allocation plan that has already seen it commit to buying back £100m of shares – or hunt for new, unquoted tech ‘unicorns’.

Haining said the fund is trying to balance the need to stay committed to its capital allocation plan with the need to ‘achieve and maintain scale’ in the portfolio.

‘If capital is simply returned, then portfolio concentration increases, and firepower and scale decrease. If this continued, it would effectively imply a winding-down of the vehicle,’ he said.

Haining said a ‘de facto wind-down’ was contrary to the plan set out at the continuation vote, which passed overwhelmingly in March last year. He added it would increase ‘the perception of risk’ around the portfolio and ‘could lead to the discount…beginning to widen again, undoing the impact of the capital return undertaken to date’.

Pressure on Chrysalis to strike the balance may grow as activist Asset Value Investors, which feasibly could push for a more rapid programme of capital returns to shareholders, increases its stake.

The asset manager, already Chrysalis’s top shareholder, disclosed this week that it had increased its stake from 10.5% to 15.4%.

The group manages AVI Global Trust (AGT) and MIGO Opportunities (MIGO), both of which have positions in the fund.

AVI declined to comment...

... Deutsche Numis analyst Gavin Trodd said the managers and board were right to be mindful of the risks around the Klarna IPO.

‘We expect investors will view this potential exit, and what to do with any proceeds, as a key trigger point to re-examine Chrysalis’ strategy,’ he said.

‘The manager previously commented that it is considering the possibility of further investment activity. In our view, the bar for new investments is high and we believe that some investors are likely to currently favour the return of capital, despite the discount narrowing in recent months.’

Stifel analyst Iain Scouller said there has been a ‘significant improvement’ in balance sheet liquidity, which stands at £151m after the sale of Graphcore to Softbank, the £79m received as an initial consideration from the sale of Featurespace and a £70m loan facility agreed with Barclays.

He said Chrysalis was a ‘high-reward-high-risk portfolio’ given 75% of the NAV is invested in the five largest investments: Starling, Wefox, Smart Pension, Klarna, and The Brandtech Group.

‘We think the recent significant strengthening of the balance sheet does justify the shares trading on a narrower discount than in the past couple of years,’ said Scouller...

[marlint111] 10/1/2025 09:28

Peterrr3 - the positive to take from WeFox is that its shrunk so much its now a tiny part of the portfolio- so hard for it to provide much more drag.

[speedsgh] 10/1/2025 09:24

AVI have increased their shareholding in CHRY to over 15%.



They last reported crossing the 10% threshold in August last year.

[peterrr3] 10/1/2025 09:19

Wefox has sold off a couple of country operators so hopefully no longer a capital drag.

[peterrr3] 10/1/2025 09:18

I thought the financials were pretty sound given wefox. I expect Starling to provide some good profit figures and hopefully IPO on the back of them.

[speedsgh] 10/1/2025 09:16

Annual Report and Audited Financial Statements -

Wefox remains the drag here. Note a further EUR20m invested since financial year end in Sept...

"There has been significant change at wefox over the past twelve months. In March, wefox appointed Mark Hartigan as its Executive Chairman and CEO, with Julian Teicke transitioning into the role of Non-executive President. A permanent CEO was later identified, with Joachim Muller appointed in September 2024.

Joachim Muller is a highly experienced leader in the retail and commercial insurance industry, with expertise in business transformation and digitalization in multinational markets. He was previously CEO of Allianz Global Corporate & Specialty SE, and CEO of Allianz Commercial, where he was responsible for bringing together Allianz's Commercial insurance businesses under one global umbrella.

The focus of the management team during the period has been to streamline the company's operations, disposing of non-core assets and enhancing its core strengths. This period of restructuring has included a reduction in the cost base, optimisation of processes and investment in keys areas, to build a more resilient and efficient organisation. Going forward, wefox will only focus on markets where it has profitable operations of critical size or is on track to achieving this within the next 12 months.

In this context, the company is likely to look to further build out its market positions in the Netherlands, Austria and Switzerland, and will withdraw from the German market.

The new strategy also means that the insurance carrier, wefox Insurance AG, will no longer be part of the group's core business. The sale of the insurance carrier was completed post period end.

A €25 million funding round was completed in June 2024 to support the ongoing restructuring plan and further capital was raised through the sale of certain assets of the business. In July, wefox Germany Holding GmbH reached an agreement with Ecclesia Group on the sale of Assona GmbH. In addition, the company reached an agreement with IWV Versicherungsservice AG to transfer its insurance brokerage activities in the German market through the sale of a subsidiary. These two transactions largely complete the exit of wefox from the German market.

As a result of the restructuring activities outlined above, the valuation of wefox was written down materially over the period, reflecting a more cautious assessment of the company's valuation, insertion of a variety of downside scenarios in the blended valuation put through the share capital waterfall, and the treatment of certain CLA instruments as debt.

The Company has invested €20 million in wefox since period end.

It is also noted that Richard Watts was appointed to the company board in June."

------------------------

"The Company entered into a convertible loan agreement with wefox Group Plus AG on 13 November 2024, and has advanced a total of €20 million since the end of the period."

[grahamg8] 02/1/2025 07:48

Sounds like CHRY lost in their claim against Revolution. <1% mcap is say £6m at most vs a claim of £45m. But then again we might see a 1p rise in the share price Every little helps.

[grahamg8] 19/12/2024 17:36

Will the person who owns the last share turn the lights out when they leave and take all of the remaining discount with them.

That's another 12% of the shares still to be bought back. No surprise it is taking a while and slowly pushing the share price up.

[craigso] 19/12/2024 17:08

Happy to see this hold onto 100p.

But today's announcement shouldn't have come as a surprise to anybody at all. The most interesting bit is that only £27m has been spent on buybacks so far, so we've got £73m to go. And that's before Klarna - which will probably just provide validation of its valuation rather than an additional source of buyback cash.

[speedsgh] 19/12/2024 14:49

Following completion of the Featurespace disposal, CHRY now have funds now in place to increase capital return (share buyback) programme from £40m to £100m.



"Following the receipt of proceeds, we are delighted that the second element of the CAP is now fully funded, and that the Company will be able to continue to return capital to shareholders in advance of what we anticipate to be a successful Klarna IPO in the not-too-distant future."

[mirabeau] 19/12/2024 13:54

breakout here

[peterrr3] 12/12/2024 07:54

Klarna fined 50 million in Sweden for money laundering deficiencies in their systems. Don't know if this opens up claims elsewhere they operate.

[davebowler] 05/12/2024 14:13

hTTps://news.uk.cityam.com/story/2288770/content.html

[davebowler] 04/12/2024 18:33

hTTps://www.msn.com/en-gb/video/news/fbi-investigate-mysterious-drones/vi-AA1vfH6n?cvid=7244f66c448141ecace2325b61309130&ocid=sappandhp

[knowing] 25/11/2024 13:51

Sebastian Siemiatkowski, CEO of Klarna, said, “We're back in familiar territory: profit and growth, just like the old days.

Can they get back to $41bn MC?

[craigso] 17/11/2024 10:34

An investment from AVI is usually a great sign. Not just because they've sniffed out some hidden value, but because they've also got a good idea of the catalysts that will narrow the discount within a reasonable timeframe. (of course, CHRY is well-covered so those catalysts aren't a surprise to anybody on this thread)

This is a bit different from now-stablemate MIGO, which also invests in heavily-discounted ITs, but doesn't really seem to have a plan for helping to narrow those discounts. (FWIW they have also bought a stake in CHRY)

[peterrr3] 15/11/2024 11:36

Thanks speed. Nothing new in the analysis but always good to hear it from someone who has stumped up for a sizeable investment, rather than just sitting on the fence.