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CHRY Chrysalis Investments Limited

71.80
2.70 (3.91%)
01 Dec 2023 - Closed
Delayed by 15 minutes
Share Name Share Symbol Market Type Share ISIN Share Description
Chrysalis Investments Limited LSE:CHRY London Ordinary Share GG00BGJYPP46 ORD NPV
  Price Change % Change Share Price Shares Traded Last Trade
  2.70 3.91% 71.80 964,394 16:35:27
Bid Price Offer Price High Price Low Price Open Price
71.00 71.90 71.90 69.70 70.00
Industry Sector Turnover Profit EPS - Basic PE Ratio Market Cap
Finance Services -591.99M -601.29M -1.0103 -0.71 425.53M
Last Trade Time Trade Type Trade Size Trade Price Currency
17:53:11 O 3,760 71.80 GBX

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Date Time Title Posts
19/11/202320:13Chrysalis Investments155

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Posted at 02/12/2023 08:20 by Chrysalis Investments Daily Update
Chrysalis Investments Limited is listed in the Finance Services sector of the London Stock Exchange with ticker CHRY. The last closing price for Chrysalis Investments was 69.10p.
Chrysalis Investments currently has 595,150,414 shares in issue. The market capitalisation of Chrysalis Investments is £425,532,546.
Chrysalis Investments has a price to earnings ratio (PE ratio) of -0.71.
This morning CHRY shares opened at 70p
Posted at 30/10/2023 11:15 by captain stock
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: 6194RChrysalis Investments Limited30 October 2023The information contained in this announcement is restricted and is not for publication, release or distribution in the United States of America, any member state of the European Economic Area (other than to professional investors in Belgium,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 +44 (0) 7976 098 139 Montfort Communications: chrysalis@montfort.london Charlotte McMullen / Toto Reissland / Lesley Kezhu Wang Jupiter Asset Management: James Simpson +44 (0) 20 3817 1696 Liberum: Chris Clarke / Darren Vickers / Owen Matthews +44 (0) 20 3100 2000 Numis: Nathan Brown / Matt Goss +44 (0) 20 7260 1000 Maitland Administration (Guernsey) Limited: Chris Bougourd +44 (0) 20 3530 3109 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 rns@lseg.com 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)
Posted at 13/6/2023 17:11 by tania67
@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."
Posted at 07/5/2023 18:40 by arja
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.
Posted at 04/5/2023 13:58 by brucethegoldfish
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.
Posted at 13/2/2023 17:33 by spectoacc
CHRY buying £20m more Starling off trust manager Jupiter is absolutely scandalous IMO.

And they're deliberately paying a price that gives them a small uplift to the NAV - of course they are!

So now Starling will be c.15% of CHRY, and CHRY will be down to a few tens of millions of liquidity. What happens when there's fundraisings at other holdings?

Just when you thought the Jupiter scandal couldn't get any worse/had largely blown over.

So I suspect that's why GROW has legs, and CHRY are chopped off at theirs.

Would be interested in any dissenting views.
Posted at 30/11/2022 10:16 by captain stock
This a good update for sure. Starting to cost average now, well underwater on this.

GLA


Update on Performance Fee Arrangements

As previously notified to shareholders, the Board of Chrysalis and Jupiter have been engaged in discussions to revise the current performance fee arrangements in order to ensure long-term alignment between the management team and Chrysalis shareholder interests.

An agreement in principle has now been reached on revisions to the performance fee. In summary, these are:

-- Overall performance fee level reduced from 20% to 12.5% of the amount by which the adjusted net asset value exceeds the higher of the high-water mark and the hurdle rate

-- Performance fee to be satisfied in shares (excluding tax and other liabilities attributable to receipt of the performance fee which will be satisfied in cash), with a deemed issue price set at the higher of NAV and share price as at the year-end in respect of which the fee accrues

-- The shares allotted under the performance fee will be allocated by Jupiter solely to the members of the management team to ensure alignment of the team with Chrysalis shareholders

-- Current "high-water mark" set in September 2021 is maintained at the same level
-- Introduction of a deferred settlement structure; 25% of the shares due in any performance fee payment will be immediately issued with the remaining 75% of payment deferred by Chrysalis for between 3 and 5 years, subject to share price tests

-- A cap on the performance fee payable in any one year based on the performance fee payment not resulting in the Company's total expense ratio (TER) exceeding 3.75% in that year

Further details will be provided to shareholders in due course through a circular where shareholder consent will be sought by virtue of these changes being a related party transaction for the purposes of the Listing Rules. If approved by shareholders, it is expected that the revised arrangements will apply with effect from the start of the Company's current financial year.
Posted at 24/11/2022 15:58 by wad collector
Trading Update

Net Asset Value

The Company announces that as at 30 September 2022 the unaudited net asset value ("NAV") per ordinary share was 147.79 pence.

The above NAV calculation is based on the Company's issued share capital as at 30 September 2022 of 595,150,414 ordinary shares of no par value.

September's NAV represents a 15.69 pence (9.6%) decrease since 30 June 2022 and a 41% decline over the Company's financial year to 30 September 2022.

Key highlights

Key drivers of the Q4 NAV performance were:

-- Following the successful completion of primary funding rounds, and the more resilient performances of listed peers' share prices , Deep Instinct and Featurespace were marked up

-- Starling, Graphcore and InfoSum were marked down following a derating of their relevant listed peers

-- The Company's largest holdings continued to make excellent progress and trade well against a challenging backdrop, during the quarter to September. Revenue growth across the portfolio was strong over the financial year and is projected to be 53% on a weighted average one-year forward basis

-- NAV decline of 41% over the financial year to 30 September 2022, predominantly driven by the down-round undertaken by Klarna versus a 27% decline in NASDAQ and a 62% decline in the GS Non-Profitable Tech Index

-- Private assets contributed to a 71.86 pence decline in the NAV per share over the financial period to 30 September 2022 with listed assets contributing to a 31.90 pence decline. The NAV per share captures a weighted average mark down of individual assets' peak valuations of approximately 50% . Protection mechanisms extant in certain assets have limited the impact of these mark downs on the NAV per share

-- Five portfolio companies have raised a total of approximately $1.5bn over the calendar year to date. Despite extremely difficult funding markets, portfolio companies have continued to attract significant investment, including from new holders. The Investment Adviser believes this demonstrates the strength of the underlying investment cases. Of these five rounds, only that of Klarna was undertaken at a level below its prevailing carrying value, this having been written down by approximately 35% before the down-round. Chrysalis contributed $45m of primary capital to Starling Bank, Klarna, Featurespace and Deep Instinct, representing just 3% of total capital raised. The late-stage nature of the majority of the portfolio, and thus typically diverse shareholder lists, enables the Investment Adviser to be efficient in the allocation of capital

-- Chrysalis has a robust balance sheet. As at 17 November, the Company held approximately GBP67m in cash and also had a GBP 13m position in Wise, resulting in total liquid assets of GBP 80m

-- The portfolio is well funded, with 35% of the portfolio now profitable; 32% funded through to profitability based on company budgets; and a further 14% with a cash runway of approximately two years. This represents a substantial improvement from our previous update. On this basis, the Investment Advisor believes the foreseeable, likely future funding requirement across the portfolio is approximately GBP20m
Investment Adviser Comments

Richard Watts and Nick Williamson (co-portfolio managers) comment:

'We are very encouraged that in an extremely challenging market, five of our largest holdings have raised $1.5 billion in aggregate over the calendar year to date, with some welcoming new high-quality investors onto their share registers. We believe this demonstrates the ongoing strong performance of these assets and their compelling investment cases. Furthermore, the robustness of our valuation methodology is demonstrated by the fact that four of the five funding rounds were completed above the prevailing carrying value in Chrysalis.

The macroeconomic and geopolitical backdrop is uncertain, but we remain confident that many of our assets will continue to disrupt the huge markets in which they operate; our top six holdings have a sub 1% market share of their aggregate total addressable markets. In our experience, disruptive companies generally compound strong rates of growth throughout the economic cycle, and we believe this will be reflected in our NAV over time. Wise is a very good example of this, with analysts currently forecasting that the company will generate the same rapid rate of revenue growth through 2022 as when Chrysalis first invested in it four years ago.

Many of our largest holdings have evolved into market leaders since the point of investment, and we are confident in the outlook for these companies. The investment team has had a particular focus on working with portfolio assets over the course of 2022 to ensure that they are appropriately balancing growth and profitability considerations and are sufficiently capitalised to deliver on their plans. This should translate into successful exits and strong returns for our shareholders over the medium term.

Chrysalis has a portfolio approach to diversification to mitigate stock specific risk, and this has been borne out by the current macroeconomic backdrop, which has affected different assets in different ways. For example, our consumer exposure has seen a negative impact from inflationary pressures, which in turn have triggered a rising interest rate environment, to the benefit of some of our financial exposure.

Our original premise when Chrysalis was launched was that, while not all investments would be outright winners, a diversified portfolio would withstand market shocks and the most successful investments would offer the potential for multiple returns on invested capital, ensuring an attractive overall return for investors. We believe this premise still has validity."
Posted at 01/9/2022 05:40 by spectoacc
One of the worst tips I've ever read.

"...A drastic fall in the value of such a portfolio was inevitable, no matter how well it was run or how strong the prospects of the individual businesses in it."

Yet tip it they did, at a premium, and it's now down 70% from there.

No mention of the vast sum Jupiter ripped out of it for unrealised "gains". "Well run" indeed! Nor how much of it Jupiter/Jupiter entities still own.


"...Valuers now advise the board, which makes the final decision.".

It's the last part of that sentence which is key.


"Partly, in Questor’s view, this reflects the fact that the NAVs of trusts that invest in unquoted assets are updated with a time lag that usually runs to three or six months."

They've got it a*se about t*t. We're in the foothills of the downgrades to valuations, including many that won't pull through or be able to raise new funds. The lag doesn't mean the share price is failing to reflect improvement - it means the share price is anticipating what's coming, which is more interest rate rises, more big falls.

They talk about Starling Bank reaching profitability, yet no mention of what it's being valued at?

100% revenue rises for some holdings, but no mention of what those revenue rises are costing?

I doubt every CHRY holding is going down the toilet, but not difficult to pick out several that are - Klarna is a Klaxon. Starling are on this weird PR campaign to deflect criticism of BBL fraud.


"We referred to the recovery in growth and tech stocks over the past two months. But there is no sign of it in the Chrysalis share price, which stands at a record low of about 73p."


We so haven't seen the bottom of the market, nor the end of comedy valuations in "growth" yet. At some point, CHRY's share price will reflect a good each-way bet for recovery. Averaging down at -70% isn't it IMO.

The whole thing's been very Woodford, and WPCT/SUPP has been tipped all the way down too.
Posted at 01/9/2022 05:26 by unastubbs
From The Telegraph today


Investors need nerves of steel owning this fund – but this really is the best time to buy

You are always running a risk buying – or indeed tipping – an investment trust that is trading at a premium, and Questor’s advice to readers in June last year to buy shares in Chrysalis Investments at an 18pc premium has rather proved that rule.

That premium has now morphed into a discount of about 55pc. As is often the case with trusts, movements in the discount or premium amplify what is happening to the value of the actual portfolio – the net asset value – and in the case of Chrysalis, the NAV has also fallen severely since our tip.

Take the two things together and we are in the red to the tune of about 70pc.

The rational course of action now is to seek to understand the reasons for the trust’s poor performance and form a dispassionate opinion on the chances of a recovery. To do this, we need to understand what Chrysalis does and appreciate the extent to which its investment strategy exposes it to forces beyond its control.

It invests in unquoted stocks, mostly newish businesses that seek to disrupt existing markets via the use of innovative or superior technology.

However, its holdings are not start-ups: they are more established, often profitable, and in some cases close to seeking a listing (some of its holdings have already floated).

In the wider economic and stock market circumstances of the past year – the return of inflation, rising interest rates and the consequent turn of the tide away from “growth” stocks and into “value” – a drastic fall in the value of such a portfolio was inevitable, no matter how well it was run or how strong the prospects of the individual businesses in it.

We have written many times about the unavoidable difficulties of valuing unquoted assets, but whatever valuation method you use and whatever its shortcomings, the only possible move in value of a portfolio of young technology stocks over the past year has been down.

In fact, Chrysalis has put a lot of effort into valuing its assets appropriately and independent valuers now advise the board, which makes the final decision.

To sum up, the value of the portfolio has suffered over recent months as the result of powerful forces in the financial markets that its managers could never have influenced. But what are its prospects now?

While we have seen a decisive change in mood back in favour of growth and tech stocks in the past two months, we cannot be sure it will continue. What we can do is look at the trust’s holdings and get a sense of their prospects for profitable growth over the years ahead, in the hope and belief that once the market has calmed down it will be the fundamentals of individual businesses that determine their value once more.

In a trading update last week, Chrysalis reported “strong revenue growth across the portfolio and excellent trading among [its] largest holdings”.

It said Starling Bank, the largest holding at 20pc of assets, had reported its first full year of profitability with pre-tax profits of £32.1m. But on an annualised basis, its current pre-tax profits are more like £92m, thanks to year-on-year lending growth of 72pc.

The second largest holding, Wefox, a “digital insurer” that makes up 17pc of the trust, “grew revenues to more than $320m (£275m) in 2021 and is on track for revenues to exceed $600m by the year end, representing growth of almost 100pc”, Chrysalis said.

Brandtech, a marketing technology company that accounts for 9.4pc of the portfolio, has also “continued to perform exceptionally well in both revenue and profit growth”, it added.

We referred to the recovery in growth and tech stocks over the past two months. But there is no sign of it in the Chrysalis share price, which stands at a record low of about 73p.

Partly, in Questor’s view, this reflects the fact that the NAVs of trusts that invest in unquoted assets are updated with a time lag that usually runs to three or six months.

But there is nothing to prevent improved investor sentiment lifting the share price (in other words, narrowing the discount), and the fact that this has not happened suggests to this column that investors have given up on the trust.

This feels like the point of maximum pessimism – the best time to buy, even if strong nerves will be needed.

Questor says: buy

Ticker: CHRY

Share price at close: 71.9p
Posted at 26/1/2022 08:06 by speedsgh
Annual Financial Report -

Some excerpts:

"Despite recent market weakness in growth stocks, including technology names, we believe Chrysalis is well positioned; we think a number of our major holdings are attractively valued versus their listed peers, are growing very quickly and, in many cases, are digital market leaders. In the current febrile market environment, our focus remains on supporting our companies to continue to build and grow. We firmly believe that we are still at the start of digital disruption and our purpose of identifying and enabling the most innovative technology enabled companies to disrupt huge addressable markets will provide exceptional long-term returns to shareholders."

From the Chairman's statement:
"Our structure enables us to take a long-term view to value creation; public markets are often shorter term in outlook and sometimes growth businesses, particularly those where growth has been prioritised over margin maximisation, struggle to make the case for investment to those public shareholders, who are more used to slower-growing, profit-maximising companies. We believe that all our listed investments have significant upside from their current market prices. However, if public markets continue to undervalue assets, Chrysalis does have the flexibility to maintain its shareholding if companies choose a return to the private marketplace to continue their growth development."...

"The Company's share price rose 84% over the year to 267p, and, notwithstanding the post year end correction in technology stocks, it is still showing a substantial gain over the period from its opening level of 145p. While at the time of writing growth stocks appear to be out-of-favour with investors, experience shows how quickly market sentiment can swing. Fundamentally, the aim of Chrysalis is to invest in companies which can generate significantly faster growth rates in the medium-term than those typically available in listed markets. This should ultimately provide the Company the ability to outperform stock markets in share price terms."

From the Investment Managers report:

Re THG
" However, into period end and post period, the share price suffered heavy selling pressure reaching c121p in January 2022. While well documented, the reasons appear to centre around:
· concerns over corporate governance;
· uncertainty surrounding the possible exercise of the SoftBank option to buy 19.9% of Ingenuity and the implicit £4.5 billion valuation of the division, as well as prospects for its future growth; and
· a modest, downgrade to EBITDA mainly FX driven.

In response, THG has:
· made several moves designed to improve corporate governance, including: a commitment to rescind the founder's Golden Share, which effectively prevents an unwanted takeover in the next two years, and splitting the role of CEO and Chairman, with a process underway to identify an independent candidate to fill the latter;
· appointed a SoftBank representative to its board; and
· upgraded expectations for Ingenuity growth.

As the representative of major shareholders, we engaged with the company to understand and support its plans, particularly in respect of corporate governance, and we are encouraged by the company's optimism surrounding Ingenuity. As part of our normal process, we have revisited our investment case and believe there has been no substantive change to the investment thesis since IPO. Given the current valuation, we believe there is significant upside potential in THG shares, and as a result, have topped up the Company's position in THG following the year end."...
Chrysalis Investments share price data is direct from the London Stock Exchange

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