I personally believe the upside here will primarily come from the awareness that CHRY has successfully completed its IPO and is full of meaningful amounts of other companies. Additionally, there is an option for any cash from the sale of Klarna to be returned to shareholders at full NAV, or to be used to build a war chest for further buybacks and M&A. I previously sold out when it was MERI bought at 80 and sold at 220p but had a good tailwind back then. Currently, the headwinds include Trump and the NASDAQ, but US investors may seek to diversify out of the S&P 500 and into international stocks available on the NASDAQ.
If the IPO gets lucky and Tariffs resolved (ever hopeful) then that would give risk markets a boost. |
Thank you craigso - I thought we had it at a value of about $15bn - so the impact will be more on the certainty of that value than increasing the NAV per se (although if the raise goes well there should be a knock on effect).
Who knows whether that's enough to reduce the discount, the market seems to want cash in hand and not potential. |
Klarna will be seeking to raise $1bn by selling new shares in the company. (at a $15bn valuation that would be roughly 6.5% of the total number of shares outstanding)
And, yes, presumably the relatively low number of shares on offer is intended to:
1. restrict supply so that demand chases those tradable shares to higher and higher prices
2. Klarna doesn't really need that much cash for growth / operations
No idea how long existing shareholders will be locked in. But the main point for CHRY is getting visibility on value - CHRY has Klarna on a NAV of $14.6bn IIRC - so the discount can decline substantially if that number is proved correct and/or the Klarna share price spikes higher. |
At a $15bn valuation what would that mean for our NAV. A bit more difficult, what would it mean for the share price and our discount. Thank you in advance |
Talk of a $15bn valuation on a $1bn IPO so suspect aim is to increase valuation significantly and gradually feed more stock to market. |
Oops sorry Klarna set to file for IPO as early as next week |
Karma said to IPO as soon as next week. |
Buybacks halved widening discount to 38% and was somewhat unexpected as others like HVPE, OCI, PIN all held up here in Europe. And today we have European rates surging up helping with NTI for the likes of Klarna and Starling Bank. I don't believe that buybacks are ever used to manipulate share price downwards to buy stock at a wider discount, but perhaps i have a gap in my knowledge that some one can fill? |
Peter I would not have a clue about taking market share from those clients? Don't they need to sell Engine internationally as it would be almost a conflict of interest to sell to other UK banks. The gulf looks interesting. It is very exciting if hidden part of the business. |
Hi Scruff, AMP is live delivered on time on budget. It depends how Starling stacks up to the likes of Thought Machine in terms of cost and delivery whether much extra business comes Stirling's way, but the fact the team is hiring a reasonable number of additional tech staff looks promising. |
 Nice little fall today to buy back at 36%+ discount despite the tail wind of financial sector. While I am fully invested I am happy to see falls like this for buy backs of 156p worth of growing asset value for 100p.
Here is a nice summery written by a forum member on Citywire about Engine which is part of Staling Bank:
Richard Watts, co-manager at CHRY, projected that the bank could approach a £10 billion valuation in the coming years. This optimistic outlook was based on the anticipated growth of Starling's Software-as-a-Service platform, Engine, which aims to license banking software globally. This platform, Engine, has been monetised and is actively generating revenue by providing banking technology solutions to financial institutions globally.
I have found these client implementations:
1. Salt Bank in Romania: Launched in April 2024, Salt Bank is a digital bank powered by Engine's software. Remarkably, it onboarded 100,000 customers within the first two weeks and aims to reach 1 million customers within three years. Link:
hxxps://moneylowdown.com/banking/how-starling-is-helping-launch-banks-worldwide-and-taking-a-risk-free-slice-by-giving-access-to-its-software-engine/?utm_source=chatgpt.com
2. AMP Bank in Australia: Engine is collaborating with AMP Bank to launch a new digital banking offering targeting small business and consumer markets, with a planned rollout in 2025. Link:
hxxps://tech.eu/2024/04/29/engine-can-be-bigger-than-starling-says-boss-but-he-has-no-ambitoins/?utm_source=chatgpt.com
While these are the only publicly disclosed clients, Engine's CEO, Sam Everington, has indicated ambitions to expand into the Gulf Cooperation Council (GCC) region, citing high levels of digital adoption and a conducive environment for rapid implementation
In summary, Engine has transitioned from development to active monetisation, and is contributing to Starling Bank's revenue streams and international presence so it is more than just it's banking operations that has always had the odd hick up along the way. Engine could be where the longn term value could be. Part bank. Part fintech. |
UK banks on an absolute tear can only mean our 30% in Starling Bank is worth more on calibration.
Financial sector in the US seems to be recovering from the dip opertunity. |
An impressive 700,000 shares bought on a single day (Thursday) at about 34.5% discount is very impressive. It beggar's belief that UK investors continue to create disconnects in IT trusts even in a bull run of the Financial sector. I have not seen value like this before and I not in other sectors PE has bought out BBGI and M&A continues at NAV. The UK press like the FT have done so much damage in the private sector with their bias reporting it has created these opportunities here. The discount of CHRY should be at 0 or even at a small premium... indicating to me an incredible 60% upside over the next 18 months.
Chart at the end oof Friday:
Even if the share price falls from here as indicated in the MACD in the chart posted (but no other technicals, all those are "buy"), the level of buybacks are adding materially to the NAV. |
Agree with craigso the valuation doesn't really matter. I did find a reliable source regarding the range in valuation on the AVI Global Trust podcast. They are a top holder of CHRY. As for market volatility, I'm all for it! Though the market is somewhat becoming desensitised to Trump's antics, we must acknowledge his faults yet appreciate (want of a better word) his ability to drive the stock market.
Looking at the short term chart this week should be interesting as today's close ended on a trend line: |
Scruff,
It doesn't really matter what the Klarna valuation is expected to be, since CHRY isn't selling at IPO. What matters is that the IPO happens and then the value is visible to all.
The risk is probably that Klarna tries to IPO at the same time as US politicans are figuring out a way to shut down the government and to not raise the debt ceiling, leading to crazy volatility (at best)... |
I reached out to my contact in the city and the £15b valuation for Klarna is not entirely true and is just reporting on the low figure of a range from £15b-20b. I hope this helps. I will try and find a credible source online and do some more digging in the week for evidence as you can't trust any post like this one I am writing. |
They key for Klarna and the like is the momentum of Affirm Holdings Inc share price. It is on the right track and if the momentum continues... We will do fine.
All the while Starling is my darling. |
It's a very low valuation compared to AFRM though |
Yes, even at £15/16bn it would substantiate the valuation of 15% (23/24p) of CHRY's NAV when it is currently trading at a discount of 33% |
Lots of talk about $15bn. CHRY valued it at $16bn in the latest update.
I suppose the real importance is visibility on value, rather than CHRY actually selling out as part of the IPO process. And if the Klarna share price spikes on day one that can only be good news for CHRY... |
FT suggest Klarna IPO in April |
Starling results are probably "included" in the NAV uplift.
But once those go public and the press re-starts speculation re. an IPO we should see some more upward momentum here... |
Not too long before Starling announces results which I expect to give it another kick along. |
Positive reaction. Especially nice to see some positive signs re. wefox.
But ultimately there's a logical disconnect between the 30-40% discount - i.e. we, the market, don't believe your NAVs - and the share price jumping based on an upward revision of NAV. (albeit the share price increase is less than the increase in NAV)
I'm not sure what more CHRY can do. If it cannibalises itself down to a much smaller size - through buybacks hoovering up liquidity - then institutions will struggle to invest in it. |
Very positive RNS. Also sticking with the current investments probably this year feels appropriately cautious - why changes horses mid race when they are going well |
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