Liberum -
HY Results group update with the Chrysalis Investments team on Tuesday 2nd July at 10:00 BST.
if you would like to join email CIR@Liberum.com
(Maybe by invite only, though.) |
It's a shame this wasn't voted to be wound up as that would deliver the best returns to shareholders and guarantee investors ultimately get everything back at NAV. There's been so many issues here that I fear this will always trade at a big discount. |
I am just trying to work out a valuation based on Klarna and Starling. Looking at the Starling potential the best thing to do would be that when Klarna IPOs use the money from that to buy back stock along with the proceeds of the other mentioned disposal that was RNS'd and just run this as a concentrated play on Starling which looks like it may become a huge winner? |
Today's fall apparently due to further negative rumours regarding Wefox - there is a story on Citywire. Don't people realise that Wefox has already been more than fully written off by the market? Even using conservative calculations, Wefox is now basically valued on a negative basis (ie detracting from NAV) which clearly makes no sense. |
Article from 15 May.... |
 LiberumAnalyst: Shonil ChandeMkt Cap £460m | Share price 77.3p | Prem/(disc) -47.6% | Div yield n/aEventChrysalis Investments' shares closed yesterday down 16.4% following Sky News' article on wefox suggesting wefox needed to urgently sell some its loss-making businesses.Conversations have been ongoing with wefox and other shareholders over recent weeks. CHRY's manager believes there is a route to ensuring a successful outcome for wefox and Chrysalis's investment. A plan has been put in place to simplify the business and over recent weeks wefox has raised c.20m from shareholders, with CHRY contributing 3m in support of the strategy. The largest shareholders in wefox include Mubadala, JP Morgan, and Barclays. CHRY is confident of continued shareholder support for the company, if required.CHRY's wefox investment was valued at £126.5m at 31 March 2024, representing 14.8% of NAV (or 21.3p). This Q1 valuation implied a c.32% markdown in valuation, before FX.Liberum viewYesterday's -15p share price reaction implied a c.+70% write-down in wefox's valuation. Wefox is not one of the core companies that has been expected to be an exit candidate in the next 12M. Importantly, this does look like a share register that can provide further capital, should it be required. We see a limited look across to the other key larger holdings, namely Starling Bank and Klarna. They remain conservatively valued, in our view. Klarna is moving closer to an IPO, with reported valuation ranges that are at least 30% above the last carrying value. |
Does anyone know what the current dollar total valuation is currently for Klarna in the NAV? |
I meant the market is valuing at zero not the company !! |
A good piece again from the oakbloke on Starling.I imagine that positive on the results is being offset by this piece covered in a few media outlets?https://finance.yahoo.com/news/mubadala-favors-selling-fintech-wefox-163432717.htmlThe holding is already written down from the highs and the company is effectively valuing the holding at zero in my opinion anyway. Maybe a clear out would not be a bad thing in terms of certainty? |
hTTps://open.substack.com/pub/theoakbloke/p/a-more-interesting-world-with-starling?utm_source=share&utm_medium=android&r=1m6y3j |
Yes, turnover up 51%, and profit after tax up 55% to £222m. Current implied value from CHRY's 11.8% holding (in the books at £207m) is £1,760m. Increasing that value to, say £3,000m, would add 24p a share to CHRY's 147p NAV and make their stake worth 59p covering 77% of the share price. A valuation of £4,000m would cover it completely. |
Starling Bank annual results to 31/3/24 -
Starling Bank posts third annual profit ahead of expected London listing - |
Goldman-backed Starling says no plans to pursue EU bank license, expansion to come from software |
For interest..i find the oak blokes work very good quality since i have started following. It has led me to look at a few situations more carefully.Latest on CHRYhttps://theoakbloke.substack.com/p/chry-out-for-klarna-rity?utm_medium=reader2 |
Klarna ditches investor veto on share trades as $20bn float looms |
From yesterday's FT...
Starling investor targets £10bn valuation for digital lender -
UK digital bank Starling could fetch a valuation of close to £10bn within the next few years as it rolls out its banking software globally for lucrative fees, according to one of its top investors.
Investment trust Chrysalis, Starling’s second-largest backer, told the Financial Times that the app-based lender could turbocharge its revenue by licensing its “Engine” service — software that allows companies to launch their own digital banking products.
“We’ve been pushing for Engine to be developed to drive Starling’s growth, as this proposition opens up a global market for bank infrastructure,” said Richard Watts, co-manager of Chrysalis.
He said although Starling’s customer deposits and loans continued to rise, the expansion of Engine “could see a valuation approaching £10bn” for the lender.
Starling was founded by Anne Boden in 2014 as a digital bank providing retail current accounts, before expanding into business lending and mortgages.
The lender last year signed Salt Bank in Romania and AMP Bank in Australia as its first two Engine clients.
But Watts reckons Engine has “a strong pipeline” of customers and noted that the market was “very significant” for growth.
“We think Engine could grow to 40-50 clients over the next few years, which could equate to a revenue opportunity of many hundreds of millions of pounds per annum,” he said.
However, there are some questions over Engine’s growth potential given that the so-called “banking as a service” platform has not won contracts to partner with big lenders.
Starling came under the spotlight last year following a dispute with investors over its valuation.
Boden, who stepped down last year, clashed with investors over fund manager Jupiter’s decision to sell its holding at a price that cut Starling’s valuation from £2.5bn to £1bn-£1.5bn, according to people familiar with the situation.
The bank is seeking to list the business, but has not given a timeline. It generated a pre-tax profit of £195mn in 2023, six times higher than the previous year, while revenues rose to £453mn from £216mn.
Declan Ferguson, chief financial officer, said the company was “extremely excited” about the software part of the business “as it offers enormous international potential for us to bring the best of British technology to banks around the world”.
The fintech has hired Raman Bhatia, head of energy supplier Ovo, to become its new chief executive. Bhatia, a former head of HSBC’s digital bank in the UK and Europe, is set to start in the summer. |
https://www.proactiveinvestors.co.uk/companies/news/1048295/graphcore-deal-with-softbank-edges-closer-as-it-preps-finances-1048295.html |
'Knowing' vs 'Misleading'. The OED covers succinctly this under 'Gullible'. Also explained in Accountancy 101 |
Thank you both! Very helpful. |
The company has a duty to not mislead the market. That doesn't mean they have to tell us everything but to publish an NAV which they knew to be misleading because of events between the date of the NAV and the RNS would be a problem imo. So I believe the absence of a statement in the NAV RNS saying that after the NAV date there was a subsequent fundraise at a materially different valuation must mean the March 31 NAV is adjusted for the news we found out last week but which CHRY has known for a number of weeks.OTOH Brandtech has recently raised at a higher valuation and was not written up so who knows! |
I think if it was a significant down round to the recently revised valuation they would have had to say with the update. I would guess the implied valuation presumably with just existing shareholders participating was in line with CHRY last reported book value. As you rightly point out new equity raise would be a basis for valuation change. Hope that's right and that the after the event scoop given to Sky was deliberately trying to undermine value short term ...for some dubious reason. |
I have a technical question: does the CHRY NAV for 31/3/24 reflect the valuation implicit in the additional equity issue that we learned about in Friday’s update (17/5)?
As I understand it, where there has been a recent capital raise, the equity valuation implicit in this transaction should normally form the basis for the NAV estimate. This capital raise (“In recent weeks”) presumably happened after 31/3, but before the publication of the quarterly NAV on 2/5. Are they duty-bound to reflect this in the reported NAV, even though it happened after 31/3? Ignoring such a material negative valuation event would seem pretty dodgy.
I’d be grateful for clarification! If the 31/3 value represents a price at which quite a few institutions were willing to invest new equity, that would be quite reassuring. If not, then we should probably expect a further write-down in Wefox in the next quarterly NAV. |
Thanks SteMiS, I had a hunch that might be the case but too busy to check. |
How about an EGM to vote on targeting maximum book costs of 5% of NAV per holding for example ? Or maybe that doesn't work well with VCTs
That would be contrary to their stated objective, which is to hold a concentrated, high conviction portfolio. If you want a broader based, more diversified VC, there are plenty to chose from. |
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