Ultimately the Sky news story didn't really add much to what was already known - the company was clearly having some challenges and in need of restructuring, was loss-making and had been written down by a third. In any case the market has now fully written this off, so you get Wefox for free and the rest of the portfolio for a 37% discount. |
Good posts here today. Just because a business is currently unprofitable doesn't mean it has no value and I suspect kooba is right that the CEO has changed from being focused on growth to focused on profit. |
I agree - change in focus should see them not only survive but thrive. |
Having looked at bit at wefox it seems a fairly typical "successful " startup ..its revenues growing strongly (current annualised $800m with 3m customers?)but the founder was focusing on technology and world domination with a huge cost base building rather than margins and turning a profit. The change at the top a few months ago heralds the shareholders putting an experienced insurance executive in place to focus on the core revenues that can be turned into profitable income with the correct cost base whilst closing or disposing of some loss making diversions. Because there is obviously significant customer traction i think it can be achieved..but not without risk. |
They are putting in £3m out of £20m and there is a long list of much bigger investors who obviously have participated..clearly the company needed some additional funding to support a turn around and the new executive Chair spelt it out to the shareholders who put the funds up. As to whether the turnaround is successful or that the holding is realistically valued is another question. We will have to wait and see.maybe it is nothing like the complete right off the market is now discounting ? |
How long will the $20m last I wonder - "...Confident of continued shareholder support for the company, if required" seems to recognise it'll need more.
What none of the last 24 hour is, is precursor to a blockbuster float.
"...The Investment Adviser believes there is a route to ensuring a successful outcome for wefox and Chrysalis's investment."
A route to it, but time will tell. |
Unless of course they are pouring good money (ours) after bad because they don't want to admit how bad an investment wefox is. |
Wefox clearly in trouble, but the point that shareholders have already bought into plan to turn Wefox around is a strong one. Hopefully this will go some way to convincing the market that the Sky story was a selective version of events. |
The memo was at the beginning of the month and likely worse case ..the aim to scare the shareholders into putting in a stopgap to enable further time to implement the cost savings and disposals strategy . Seemed to work they got the funds they wanted. Wefox are obviously trying to refocus and move to profitability under new executive Chair and it looks like shareholders are supporting those efforts. |
 A decent RNS IMO, but does also confirm that it's in trouble. To paraphrase: "Don't worry, it's now only 14.4% of NAV":
"The Company notes a news article published by Sky News on 16 May 2024 regarding one of its portfolio companies, wefox.
The Investment Adviser has been in discussions with wefox management and other shareholders for a number of months. A plan has been put in place to simplify wefox's business model to drive the company towards profitability. Following these conversations, the Investment Adviser believes there is a route to ensuring a successful outcome for wefox and Chrysalis's investment.
In recent weeks, wefox has raised approximately €20million from shareholders, to which the Company contributed €3million in support of the aforementioned strategy; the Investment Adviser continues to consider how best to support wefox achieve its ambitions and is confident of continued shareholder support for the company, if required.
As announced on 4 May 2024, the Company's valuation of its investment in wefox was reduced for the period ending 31 March 2024, where it represented 14.4% (22.1% at 31 December 2023) of the Company's net asset value." |
With so few companies in the portfolio, nevermind this such a big one, it is insane the management can be so out of touch with it. |
Perhaps out of context it might sound like that - and I suspect that's what the article wants to get across for dramatic effect. But realistically, if the new CEO had uncovered some sort of fraud, the first thing he's going to do is not immediately share his suspicions with his shareholders. More likely, that part of the business is just performing very badly and needs closing down. |
This sounds like a fraud or something similar no??"He warned them: "My key deduction is that Italy has been running on systematically false operating assumptions...and is now insolvent without ongoing Group cash support." |
Interesting read from a few weeks ago ..cash was running low , but i figure there is some gaming going on here by new ex chair,https://coverager.com/wefox-had-another-negative-year/ |
Yes the Sky story feels like snippets taken from a longer note, and used out of context to make a more dramatic story. It could be that the original email outlined a worst case scenario alongside various other scenarios. Either way Chrysalis need to clarify things ASAP. Worth noting that wefox was 14% of NAV, while share price fell by 16%, so market pricing in a complete write down of wefox plus another couple of % for good measure! |
Been watching this for a few weeks ..have made a small initial purchase as likely already discounting the mark down now.But only 25% unit...see if there is some clarity..maybe wefox putting investors under pressure to put more cash up?? |
To me the key ambiguity in the Sky story is "outlined a bleak scenario". This might have been one of a number of different scenarios discussed in the leaked memo. This could be consistent with the limited write-down in the CHRY NAV.
But, as Riverman noted, the market is currently pricing a complete write-off as a near-certainty. |
Yes, all their investments are high risk (but also high reward) - they're an early stage investor after all. The other key positions though do appear to be at least trading well, and in that respect wefox was a clear outlier.
Tempted to add a few but suspect will fall a bit further as markets digest news. Hopefully the company can put out an update to clarify things a bit. |
I suspect we'll see an announcement tomorrow/soon clarifying Wefox status. |
Ignoring the BBL fiasco from Starling, they seem a really good operator.
Klarna a good operator too, but that business model? You'd want out at IPO.
Still - the discount accounts for some of it. |
At NAV 147.46p, share price of 92p was a 37.6% discount
Assuming Wefox is worthless then, NAV is 126.2p, for which the share price of 77.5p is a discount of 38.6%.
So marginally cheaper and Wefox not being worthless in for free |
@riverman77, the reality is that bar Starling & Klarna the rest of the portfolio appears high risk. Nobody has seen the financials of deep instinct, featurespace, infosum. You can look at smart pension on companies house - it's not a pretty sight! |
This isn't going to be a good week by the looks of things |
It sounds like they've overstretched and are trying to wind back, I do find it hard to believe that a business which was valued at €4.5b and apparently near profitability could go into liquidation without support, but obviously stranger things have happened.
Sky really do seem to have a habit of sticking their oar in though, if they were looking to raise capital to shore things up then a news leak like this could be disastrous |
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