TIDMCHRY
RNS Number : 6400H
Chrysalis Investments Limited
31 July 2023
The 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is not for publication, release or distribution in the United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.
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulation (EU) No. 596/2014 which forms part of
domestic law in the United Kingdom pursuant to The European Union
Withdrawal Act 2018, as amended by The Market Abuse (Amendment) (EU
Exit) Regulations 2019.
31 July 2023
Chrysalis Investments Limited ("Chrysalis" or the "Company")
Quarterly NAV Announcement and Trading Update
Net Asset Value
The Company announces that as at 30 June 2023 the unaudited net
asset value ("NAV") per ordinary share was 136.86 pence.
The NAV calculation is based on the Company's issued share
capital as at 30 June 2023 of 595,150,414 ordinary shares of no par
value.
June's NAV represents a 6.84 pence per share (5.3%) increase
since 31 March 2023.
Movement in the fair value of the portfolio accounted for
approximately 9.28 pence per share, with foreign exchange
generating an adverse movement of approximately 2.20 pence per
share. Fees and expenses make up the balance.
Investment Adviser Comments
Richard Watts and Nick Williamson (co-portfolio managers)
comment:
"It is pleasing to see the NAV increase for a second consecutive
quarter. Many listed peers have materially rerated year to date,
and this is beginning to be reflected in our portfolio valuations.
The independent valuation committee is also gradually moving away
from price of recent investment in some instances.
We have continued to support and work alongside our portfolio
companies, and we exit the period with a portfolio that is
generally trading robustly against a challenging economic backdrop,
and which is largely well-funded.
The investment team remains focussed on maximising shareholder
value - working with our portfolio companies towards an IPO or
trade sale - and building an exciting pipeline of investment
opportunities, particularly given the disruption we are witnessing
through emerging themes such as generative AI.
We are encouraged by the slightly more active IPO market over
the last quarter, particularly as we have several later stage
assets that are either profitable or funded to anticipated
profitability and should make excellent IPO candidates in due
course."
Portfolio Activity
Investment activity continues to be focussed on the existing
portfolio and the following transactions took place over the
period:
-- Early in the quarter, the Company invested GBP12.5 million in
Smart Pension in a $95 million Series E fundraise led by Aquiline
Capital Partners.
-- In June 2023, a further GBP2 million was invested in Tactus
to strengthen its balance sheet, support the refinancing of its
bank facilities and ultimately enable the company to accelerate
trading.
-- Over the course of June 2023, the company trimmed its
position in Wise following a positive results announcement. The
shares were sold at an average price of 623.24 pence per share.
Chrysalis' total cash-on-cash return on Wise currently stands at
2.9x.
Portfolio Update
Portfolio growth momentum continues to be strong, particularly
in the Company's larger positions. Focus remains on reaching
profitability and further progress has been made across the
portfolio in the quarter, with 85% of the portfolio either
profitable or funded to anticipated profitability.
wefox
wefox had a strong first half of the year and is trading ahead
of plan. Progress towards achieving run rate profitability in 2023
remains on track.
In May 2023, wefox announced it had secured a $55 million credit
facility with JP Morgan and Barclays, following the second close of
its Series D fundraise, with the funding earmarked to further
strengthen the company's insurance and distribution capabilities
and to further develop its technology platform.
Following the launch of its global affinity business in early
May, wefox has announced a new partnership with PROPUP, an Austrian
proptech start-up. By partnering with wefox, PROPUP is now able to
offer customers access to a wide range of insurance solutions and
advice via its own platform. The affinity business serves to
increase wefox's existing distribution channel, delivering
insurance through partner products.
Starling
In May, Starling released its annual financial results for the
year to 31 March 2023. Progress has been impressive, with very
strong growth in revenue and profits, assisted by 'Buy to Let'
mortgage origination via Fleet Mortgages and by an increase in
yields on cash and debt securities, following increases in the Bank
of England base rate and its impact on wider market yields. Total
revenue for the year was GBP452.8 million, up 109%, with profit
before tax of GBP194.6 million, a 6x increase on the prior
year.
At the same time, after a decade at the helm, Anne Boden
announced her intention to step aside as CEO of Starling. At the
end of June, Anne handed over her responsibilities to John
Mountain, who was appointed Interim CEO. John has been at Starling
for seven years as a pivotal member of its executive team,
previously acting as COO.
Brandtech
In early June, the company completed the acquisition of
Jellyfish, the digital media and marketing group. The combined
group is expected to generate more than $1 billion in annual
revenues, with over 7,000 employees, working for eight out of ten
of the world's largest advertisers, and 49 of the top 100.
The company also acquired 100% of Pencil, which operates in the
generative AI marketing space. Built on Open AI's GPT large
language models, Pencil generates channel-ready ads and copy at a
significantly lower cost. Pencil complements Brandtech's existing
capability in the AI space.
Smart
The filing of Smart's Consolidated Financial Statements in June
showed that revenue in 2022 rose by 32%. Following its recent
fundraise, Smart Pension announced the acquisition of Evolve
Pensions in June, paving the way for one of the largest master
trust consolidations of 2023. The merger of Evolve's master trust,
the Crystal Trust, will bring AUM of the Smart Pension Master Trust
to over GBP4 billion.
Following the launch of The Chancellor of the Exchequer's
Mansion House Reforms in July, Smart Pension became a signatory to
the Mansion House Compact, an expression of intent to increase
investment in unlisted equities. The reforms also encourage a
merging of smaller pension schemes to allow them to develop the
scale and expertise needed to invest in private equity. Smart
Pension is expected to be a direct beneficiary of the reforms.
Klarna
Klarna continues its drive towards profitability, with its 1Q23
results showing adjusted operating losses falling by over 78% since
the same quarter last year. Lower operating costs, driven by
Klarna's cost cutting programme and improving credit losses, imply
that run rate profitability should be achievable in the second half
of the year. The company also continues to grow strongly with
retailer revenues increasing by 17% year-on-year and outperforming
GMV growth of 13% year-on-year.
Despite the valuation of the underlying asset being written up
in the period, foreign exchange movements meant the carrying value
was slightly marked down.
Cash Update
As of 30 June, the Company had net cash of approximately GBP30
million and a position in Wise of GBP10 million, to give a total
liquidity position of approximately GBP40 million.
Since the period end the Company has invested a further GBP6.5
million in Secret Escapes as part of a wider GBP31.7 million
fundraise to support the refinancing of existing debt facilities
and investment for the next phase of its growth strategy.
Portfolio composition
As of 30 June 2023, the portfolio composition was as
follows:
30-Jun
Carrying Value
Portfolio Company (GBP millions) % of portfolio
---------------- -----------------
wefox 187.0 22.9%
---------------- -----------------
Starling 138.3 16.9%
---------------- -----------------
Brandtech 107.7 13.2%
---------------- -----------------
Smart Pension 83.2 10.2%
---------------- -----------------
Deep Instinct 68.7 8.4%
---------------- -----------------
Klarna 51.1 6.3%
---------------- -----------------
Featurespace 46.9 5.7%
---------------- -----------------
Tactus 36.7 4.5%
---------------- -----------------
InfoSum 26.6 3.3%
---------------- -----------------
Graphcore 15.9 1.9%
---------------- -----------------
Secret Escapes 13.2 1.6%
---------------- -----------------
Wise 9.9 1.2%
---------------- -----------------
Sorted 0.3 0.0%
---------------- -----------------
Gross cash 30.3 3.7%
---------------- -----------------
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
GBP816 million for 30 June 2023.
Outlook
With equity markets faring better than most people had
anticipated year to date, an improved backdrop for companies
looking to IPO is emerging, with a slight tick-up in IPO activity
over the quarter, and with increased speculation around assets such
as ARM listing in New York. The company has several later-stage
assets that are either profitable, or funded to anticipated
profitability, and should make excellent IPO candidates in due
course. The Investment Adviser continues to assess the most
appropriate exit strategy for these assets to optimise investor
returns over the medium term.
The portfolio companies are largely well positioned, having
proactively managed their cost base and raised the funds necessary
to ensure that they can continue growing strongly and/or achieve
profitability. The Investment Adviser has worked closely with the
portfolio companies to achieve this, while carefully managing the
Company's own liquidity position, to enable it to respond to
unforeseen eventualities if they arise.
Factsheet
An updated Company factsheet will shortly be available on the
Company's website: https://www. chrysalisinvestments.co.uk
-ENDS-
For further information, please
contact: 44 (0) 7976 098 139
chrysalis@montfort.london
Media
Montfort Communications
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: 213800F9SQ753JQHSW24
A copy of this announcement will be available on the Company's
website at https://www.chrysalisinvestments.co.uk
The 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
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