Chrysalis Investments Share Discussion Threads

[captain stock] 30/10/2023 11:15

Chrysalis Investments Limited Quarterly NAV Announcement and Trading UpdateSource: UK Regulatory (RNS & others)TIDMCHRYRNS Number : 6194RChrysalis Investments Limited30 October 2023The information contained in this announcement is restricted and is not for publication, release or distribution in the United States of America, any member state of the European Economic Area (other than to professional investors in Belgium,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.30 October 2023Chrysalis Investments Limited ("Chrysalis" or the "Company")Quarterly NAV Announcement and Trading UpdateNet Asset ValueThe Company announces that as at 30 September 2023 the unaudited net asset value ("NAV") per ordinary share was 134.65 pence.The NAV calculation is based on the Company's issued share capital as at 30 September 2023 of 595,150,414 ordinary shares of no par value.September's NAV represents a 2.21 pence per share (1.6%) decrease since 30 June 2023.Movement in the fair value of the portfolio accounted for approximately 3.99 pence per share, with foreign exchange generating a favourable movement of approximately 2.01 pence per share. Fees and expenses make up the balance.Investment Adviser CommentsRichard Watts and Nick Williamson (co-portfolio managers) comment:"The NAV was broadly flat over the period, largely mirroring the performance of key equity markets. Notwithstanding this, the IPO market continued to show signs of life, with ARM listing in the US towards the back end of the quarter. We also note that Instacart and Klaviyo listed over the period and while their post-IPO performances have been mixed, we believe that this represents a step in the right direction. Private equity markets have also seen signs of recovery as the interest rate and macro-economic picture becomes clearer. Deal volumes are increasing from a low point in Q1 2023, and the tech sector remains key for PE.We consider both public and private exit routes as viable options. The portfolio contains a number of later-stage assets, either profitable or funded to profitability, that we believe will make very attractive targets in due course, with some considered "IPO ready". With this in mind, Klarna's comments in the period that the 'requirements have been met' to consider an IPO were encouraging to us.Our key assets are continuing to perform well from both an operational and financial perspective; this gives us confidence in the potential of the portfolio to drive NAV progression."Portfolio ActivityInvestment activity during the quarter was limited.In July the Company invested a further GBP6.5 million in Secret Escapes as part of a wider GBP31.7 million fundraise, supporting the refinancing of existing debt facilities. This capital will enable the company to accelerate marketing spend with a view to driving customer acquisition and ultimately growth. The company is already profitable, but it is hoped that the additional capital raised will result in a faster rate of growth and an even more profitable business in the near to medium term.Portfolio UpdateThe portfolio in aggregate continues to make solid progress against its financial and operating targets; this is particularly true across the core portfolio which consists of our later-stage assets:wefoxwefox continues to grow strongly and has demonstrated a clear roadmap to profitability. The Investment Adviser believes that wefox will be profitable towards the end of 2023, a target the company set itself at the beginning of the period and is well positioned to post its first full year of profitability in 2024.In the previous quarter, wefox announced that it had launched its global affinity business, which will connect insurance companies with partners that can distribute their insurance products. In recent weeks, wefox has announced that WINDTRE, Italy's leading telecommunications business, has signed a 10-year deal to launch the sale of home and travel insurance products in-store.On 1 October, wefox appointed Jonathan Wismer as its new Group Chief Financial Officer. Jonathan brings more than 25 years of experience in the insurance industry, having held senior finance roles at Zurich, AIG and Resolution Life. The appointment represents the company's continued strengthening of its C-suite as it steps up its plans for profitable growth and global expansion.On 24 October, wefox also appointed Mark Hartigan as Chairman. Mark was previously Chief Executive at LV and Head of Operations for Europe, Middle East and Africa at Zurich Insurance Group. He was Chief Executive Officer for Zurich Global Life in the Asia Pacific and Middle East region and led its regional business in Europe.StarlingStarling continues to benefit from an increase in yields on cash and debt securities, as a result of increases in the Bank of England's Base Rate, and this continues to drive interest income and profitability. Starling generates a post-tax return on equity of over 40%, making it, the Investment Adviser believes, one of the most profitable digital banks globally. Engine, the tech platform that powers Starling, offers the potential to license Starling's award-winning technology to financial organisations around the world.Starling announced that from 1 October, it will share the benefit of increased interest rates with its customers, by paying 3.25% AER interest on accounts balances of up to GBP5,000. Starling also offers a One Year Fixed Saver paying 5.53% interest on deposits between GBP2,000 and GBP1,000,000 that are held for a year. These represent extremely competitive rates of interest versus high-street banks.The Investment Adviser views these moves as consistent with Starling's brand values, as well as likely providing an incremental boost to deposit growth. Sharing the benefits of technology and scale with customers is a key enabler of growth, as has been seen in other portfolio companies.BrandtechBrandtech has made two acquisitions in the year: Jellyfish and Pencil AI. Although the acquisition of Pencil AI is smaller than Jellyfish, the Investment Adviser is excited about its potential. Pencil AI was founded in 2018 and is currently the leading AI creative and distribution SaaS platform. The company utilises Open AI's GPT family of large language models (LLMs) to generate content that is 10x lower in cost to produce but with a 2x uplift in performance.During the quarter, Brandtech launched Pencil Pro, an enterprise-level generative AI product, specifically created to meet the needs of global brands. This proposition could be significantly disruptive, and it is encouraging that Unilever and Bayer have decided to be launch partners.Smart PensionFollowing the announcement of its $95 million Series E funding round in the previous quarter, led by Aquiline Capital Partners, Smart has continued to execute its M&A strategy.During the quarter, Smart acquired Evolve Pensions, a leading provider of workplace pension services through its master trust, the Crystal Trust. Evolve has over 128,000 members and GBP750 million in assets. The acquisition of Evolve Pensions represents one of the largest master trust acquisitions of the year and makes the Smart Pension Master Trust (SPMT) the country's third biggest master trust operator. SPMT now has 1.1m members and GBP4bn under management while the group has a total of over GBP11bn under management.KlarnaKlarna released its first half results during the quarter which demonstrate sustained revenue growth and a return to profitability through the second quarter of the year.Gross Merchandise Volume (GMV) increased by +14% year-on-year (to SEK239 billion) while revenues grew by +17% year-on-year (to SEK5.5 billion). The Investment Adviser is encouraged by revenues continuing to grow ahead of GMV as it demonstrates Klarna's ability to monetise its existing customer base. Fundamental to the improved operating performance was the increase in gross profit for the period, which rose 83% year-on-year to SEK2.7 billion, driven by a 49% reduction in credit losses as a percentage of GMV.In the second quarter, Klarna generated an adjusted operating profit of SEK10 million which represents a material improvement in profitability year-on-year and the first full quarter of profitability since the Company's investment. To give a sense of how much progress Klarna has made, in the second quarter of 2022, Klarna's adjusted operating loss was in excess of USD280 million, which implies the company has moved from an annualised operating loss of over USD1 billion, into an annualised profit in the space of 12 months.Deep InstinctDeep Instinct continues to innovate and in recent weeks has launched 'Deep Instinct Prevention for Storage' (DPS). This new product applies a prevention-first approach to storage protection, wherever data is stored - Network Attached Storage (NAS), hybrid, or public cloud environments - and seamlessly integrates into existing environments to deliver unparalleled efficacy and accuracy along with enterprise-grade scalability.This is an exciting development in the industry given that the amount of data being stored in public and hybrid cloud environments continues to grow exponentially and a single infected file can put an enterprise at risk. As part of the Deep Instinct Prevention Platform, DPS fills gaps in data protection by applying a unique deep learning framework dedicated to cybersecurity. Whenever a file is added or changed in a storage environment, it is scanned immediately, and malicious files are either quarantined or deleted to prevent execution.FeaturespaceFeaturespace is a world leader in enterprise grade technology preventing fraud and financial crime. This is evidenced by a number of recent awards and product releases.As highlighted earlier in the year, Featurespace has developed a bespoke fraud transaction monitoring framework for NatWest that led to a +135% improvement in Natwest's financial scam detection rate and a 75% reduction in false positives. During the quarter, NatWest and Featurespace won 'Best Innovation by a Financial Institution' at the Datos Insights 2023 Fraud and AML Impact Awards for that specific initiative.More recently, the company has launched TallierLTM, the world's first Large Transaction Model (LTM). TallierLTM, a foundation AI technology for the payment and financial services industry, is a large-scale, self-supervised, pre-trained model designed to power the next generation of AI applications. The model has shown improvements of up to 71% in fraud value detection when compared to industry standard models.Cash UpdateAs of 30 September, the Company had net cash of approximately GBP23 million, subsequent to the follow-on investment in Secret Escapes, and a position in Wise of GBP10 million, to give a total liquidity position of approximately GBP33 million.The majority of follow-on investments have now been completed and most of the portfolio is now either profitable or funded through to profitability. While there may be additional funding requirements across the portfolio in the short to medium term, the Investment Adviser considers the Company has sufficient available liquidity to address these.Portfolio compositionAs of 30 September 2023, the portfolio composition was as follows: 30-Sep Carrying Value Portfolio Company (GBP millions) % of portfolio ---------------- ----------------- wefox 188.6 23.5% ---------------- ----------------- Starling 141.7 17.6% ---------------- ----------------- Brandtech 103.9 12.9% ---------------- ----------------- Smart Pension 79.7 9.9% ---------------- ----------------- Klarna 56.9 7.1% ---------------- ----------------- Deep Instinct 51.5 6.4% ---------------- ----------------- Featurespace 49.6 6.2% ---------------- ----------------- Tactus 29.0 3.6% ---------------- ----------------- InfoSum 27.2 3.4% ---------------- ----------------- Secret Escapes 25.0 3.1% ---------------- ----------------- Graphcore 16.5 2.1% ---------------- ----------------- Wise 10.3 1.3% ---------------- ----------------- Sorted 0.3 0.0% ---------------- ----------------- Gross cash 22.6 2.8% ---------------- ----------------- Source: Jupiter Investment Management Limited. Due to rounding, the figures may not add up to 100%. The above percentages are based on an aggregate portfolio value (including cash) of approximately GBP803 million for 30 September 2023.OutlookThe Investment Adviser remains optimistic about the prospects for the Company. As noted in the last NAV update, IPO and private markets have shown some signs of life, which is an indication that investor risk appetite is recovering to some degree.The Investment Adviser remains focused on helping the portfolio companies get to a position where they can "exit" and considers a number of assets "IPO ready". It is intended that any future realisations flow through the proposed Capital Allocation Policy that was outlined to shareholders on 13 October 2023. The Investment Adviser believes this policy would be an essential mechanism to help unwind the current share price discount to NAV.FactsheetAn updated Company factsheet will shortly be available on the Company's website: https://www.chrysalisinvestments.co.uk-ENDS- For further information, please contact: Media [phone] Montfort Communications: [e-mail] Charlotte McMullen / Toto Reissland / Lesley Kezhu Wang Jupiter Asset Management: James Simpson [phone] Liberum: Chris Clarke / Darren Vickers / Owen Matthews [phone] Numis: Nathan Brown / Matt Goss [phone] Maitland Administration (Guernsey) Limited: Chris Bougourd [phone] LEI: 213800F9SQ753JQHSW24A copy of this announcement will be available on the Company's website at https://www.chrysalisinvestments.co.ukThe information contained in this announcement regarding the Company's investments has been provided by the relevant underlying portfolio company and has not been independently verified by the Company. The information contained herein is unaudited.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 information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact [e-mail] or visit www.rns.com.RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our Privacy Policy.ENDTSTFEIFDUEDSEFS(END) Dow Jones NewswiresOctober 30, 2023 03:00 ET (07:00 GMT)

[arthur_lame_stocks] 03/10/2023 02:18

I don't know if this article is of interest to anyone, but I wonder if a float of Starling isn't on the cards soon.

[bielsainvestor] 27/7/2023 10:16

Chrysalis Investments – Putting growing pains behind it

[bielsainvestor] 14/7/2023 14:36

Chrysalis: People want to understand our valuations are ‘real’
WATCH: Jupiter’s Richard Watts pushes back on Starling criticism, discusses why he is ‘very confident’ on Klarna, and explains how Chrysalis’ gaping 47% discount could close.

[tania67] 13/6/2023 17:11

@Bielsa - Thank you. CHRY stated explicitly (7/2) that the transaction in February was at a price which implied a slight NAV uplift, so I am not sure who (if anyone!) is telling the truth here. Thoughts welcome!

"If, following Completion, the Company's independent Valuation Committee recommends that the Board apply the "price of recent investment" approach to the Company's holding in Starling this would result in a modest uplift in the Company's NAV per share compared with the 31 December 2022 calculation."

[bielsainvestor] 13/6/2023 07:43

Anne Boden stepped down as Starling CEO after investor clash

"....However, Boden’s decision followed a clash with investors over fund manager Jupiter’s decision in February to sell its holding in the bank at a price that cut Starling’s valuation from £2.5bn to between £1bn and £1.5bn, according to people familiar with the situation.

The sale was to a group of existing investors, included Chrysalis investment trust, which is run by Jupiter fund managers Richard Watts and Nick Williamson."

[spectoacc] 12/6/2023 15:36

Good spot. That will have come in before today when the price was 76p - shareholders had better hope there aren't too many more sellers in size.

Can only see some of it being shifted on.

[1nf3rn0] 12/6/2023 15:28

18m traded at 65p. Quite a sell off today. Don't see any news to substantiate it.

[1nf3rn0] 03/6/2023 06:40

From The Times:One of the biggest holdings in the Chrysalis investment trust is Deep Instinct, which uses deep learning to predict and prevent cybersecurity threats, which are usually detected only after they have happened. It also holds Featurespace, which uses AI technology to combat fraud and financial crime. A less established holding is Graphcore, which makes intelligence processing units specifically designed for AI and thinks it can beat Nvidia's chips. But persuading businesses to move away from Nvidia is proving hard.James Carthew from QuotedData said: "If Graphcore can break into that market, it could be a spectacular success, but Nvidia's dominance may prove insurmountable."

[brucethegoldfish] 26/5/2023 18:38

Interesting article on AI microchips, which Nvidia dominates with c95% market share. Graphcore are quoted as a UK competitor and disrupter, which represents circa 2% of Chrysalis portfolio.

[brucethegoldfish] 25/5/2023 16:49

Yes sorry ALS, you are correct.

I’d just edited my last comment at same time you posted.

[arthur_lame_stocks] 25/5/2023 16:48

No 16% is the percentage of CHRY's portfolio, not the amount of Starling equity CHRY owns.

At least that's my understanding.

[brucethegoldfish] 25/5/2023 16:45

“As reported on 4 May 2023, Starling comprises 16% of the Company's portfolio as of 31 March 2023.”

But does not specifically comment on specific shareholding % of Starling.

[arthur_lame_stocks] 25/5/2023 15:27

Can anyone please tell me what percentage of Starling equity Chrysalis own?

[edwardt] 25/5/2023 15:15

buying more starling was not scandalous after all!

[danny500] 25/5/2023 14:56

Lining up Starling for a float?

[arthur_lame_stocks] 15/5/2023 20:53

Interesting news on Smart today (also RNS'd). It appears that this funding round is at about the price of the most recent NAV.

If most of the investments are similarly reasonably valued then I think the discount to NAV is too wide.

The company claims that the vast majority of their investments are profitable or funded to profitability, surely at some point the IPO market will open up and there then may be opportunities to realise some of these investments at a profit.

[arja] 07/5/2023 18:40

this answers my question about CHRY and shows the published NAV is just guesswork and how can one value unquoted investments realistically ?

Has Chrysalis (CHRY) turned a corner after a horrendous 2022 for the Jupiter growth capital fund? A first quarter update on Thursday showed its portfolio of 13 mostly unquoted companies grew marginally with net asset value (NAV) adding 1.76p to 130p per share in the first three months of the year.

That small gain of 1.4%, its first advance since September 2021, is nevertheless going in the right direction after the 13.2% drop in the fourth quarter brought the total loss for last year to 46%.

Excluding currency movements, which knocked around 1.2p off NAV per share, the underlying valuations of its companies rose by 3.1p per share in the first quarter.

Having plunged 62% in the past 12 months, shares in the Guernsey investment company yesterday advanced 1.6p, or 2.8%, to 58p as some investors believed Chrysalis may have bottomed out, in which case the stock’s 55% discount to NAV is too wide.

[arja] 06/5/2023 10:31

spectoAcc,
GROW has an awful looking chart and might be heading for 240 level again .

[arja] 06/5/2023 10:28

is the massive discount to NAV because this trust has a lot of unquoted investments which are difficult to value ?

[brucethegoldfish] 04/5/2023 13:58

I’ve doubled my holding today after the latest portfolio update and good progress being made. I feel a lot of the valuation uncertainty is now diminishing and the liquidity position looks relatively robust.

The significant discount to NAV is simply overdone in my view and I can see the share price correcting in the near to mid term.

[arthur_lame_stocks] 04/5/2023 12:28

That seems like quite a bullish update. Let's hope that their confidence in the stated NAV is not misplaced.

[cordwainer] 11/4/2023 14:44

Given the improved fee structure and steadier portfolio, I made a small bet at 51p recently.