TIDMCHRY
RNS Number : 0567Q
Chrysalis Investments Limited
13 October 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is not for publication, release or distribution in the United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.
13 October 2023
Chrysalis Investments Limited ("Chrysalis" or the "Company")
Shareholder Update and Consultation
Announcement of a capital allocation policy, details on the
proposed changes to the existing performance fee and the
commencement of Shareholder consultation process
At the Interim Results the Board announced its intention to
publish details of proposed revisions to the performance fee and to
canvas Shareholders for their views around capital allocation in
light of the emerging maturity of some of the Company's investments
and the material discount to NAV at which the Company's shares
trade.
The Board today sets out a proposed capital allocation policy
for the Company and a detailed overview of the performance fee
proposal building on what has previously been announced. Both the
capital allocation policy and the performance fee have been agreed
with Jupiter Investment Management Limited (the "Portfolio
Manager").
The Board intends that this announcement shall form the basis of
a consultation with Shareholders commencing shortly. The Board
would also welcome Shareholders' broader views during this
consultation on the way forward for Chrysalis beyond next year's
AGM at which the continuation vote will be proposed. It is also
intended that the revised performance fee, which will constitute a
related party transaction for the purposes of the Listing Rules,
will be voted on as a related party transaction at a Shareholder
meeting that immediately follows the AGM. The Board considers that
this timing provides Shareholders with the opportunity to agree the
future of Chrysalis as a whole.
Summary of capital allocation policy
The proposed policy sets out a framework for disciplined capital
usage, based around three principles:
-- The Company will aim at all times to maintain a prudent cash
reserve - the Board and Portfolio Manager guide that an appropriate
cash reserve is currently believed to be GBP50 million;
-- Having met the cash reserve requirement, the Company will
next prioritise distributions to Shareholders - the Board currently
intends to utilise its existing authority to buy back up to 15% of
its share capital and, if required, seek further authority from
Shareholders to continue share buy backs until GBP100 million of
cash has been distributed, conditional on the ongoing discount;
and
-- Thereafter the Company will balance its capital allocation
between further distributions to Shareholders and portfolio
investments, aiming to distribute up to 25% of net cash profits on
realisations.
Further details on the proposed capital allocation policy are
set out in the Appendix to this announcement.
Summary of proposed performance fee arrangements
The Company and the Portfolio Manager have agreed changes to the
existing performance fee payable under the portfolio management
agreement between the Company and the Portfolio Manager (the
"Portfolio Management Agreement"). In doing so, the Company has
sought to ensure long-term alignment between the Portfolio
Manager's management team and Shareholders' interests. The proposed
variation to the payment terms and vesting provisions of the
performance fee are further detailed at the Appendix to this
announcement. The changes to the performance fee will not take
effect until approved by Shareholders.
The proposed changes to the performance fee will be considered a
related party transaction pursuant to the Listing Rules and
accordingly will require the approval of Shareholders by way of a
simple majority of votes cast on an ordinary resolution at a
general meeting to be held of the same day as the AGM. The Board is
publishing full details of the proposed changes to the performance
fee now in connection with the wider consultation exercise and a
separate circular will be published in due course in order to
convene that meeting.
The Board is unanimous in believing that the amendments to the
performance fee are in the best interests of the Company and its
Shareholders as a whole, for the following reasons:
1. it will result in a reduction in the overall performance fee
level that is potentially payable by the Company to the Portfolio
Manager in respect of any single financial year (or other
calculation period) of the Company from 20% to 12.5%;
2. it will introduce a cap as to the level of performance fees
paid in any single financial year (or other calculation period) of
the Company to 2.75% of the audited Net Asset Value;
3. it will implement a primarily share-based performance fee,
which is to ultimately be paid to members of the Portfolio
Manager's management team, creating greater alignment between the
Portfolio Manager's management team and Shareholders;
4. 75% of any performance fee in respect of a particular
financial year of the Company will be deferred and subjected to
conditions based on the long-term performance of the Company,
ensuring that the Portfolio Manager's management team is
incentivised to generate long-term value creation; and
5. the High Water Mark will be retained, meaning that no
performance fee will become payable unless the previous High Water
Mark (being 251.96 pence) is reached.
Andrew Haining (Chairman) comments:
"In deriving the proposed capital allocation policy, the Board
has sought to balance its recognition of the compelling opportunity
to buy back the Company's shares at what we believe is an
attractive discount, with our intent to drive long-term returns by
providing disciplined support for the current portfolio companies
and potentially by allocating to new opportunities in the future.
The proposed amendments to the performance fee also reflect an
alignment of interests between the Company and the portfolio
management team which has been welcomed by Shareholders since the
initial announcement of the key terms and we are pleased to provide
additional detail today in advance of the resolutions being
proposed next year alongside the continuation vote.
Both the Board and the Portfolio Manager are excited about the
current prospects for the portfolio and remain confident in the
Chrysalis investment strategy, which backs high growth, innovative
businesses which are leading transformation within their sectors.
The Board looks forward to discussions with Shareholders in the
coming months regarding the proposed capital allocation framework
and the future direction of the Company."
Shareholder Consultation
The Board will shortly be beginning a Shareholder consultation,
demonstrating its commitment to proactive Shareholder engagement
ahead of convening its 2024 AGM, at which a continuation resolution
is required to be proposed. It is the Board's intention that the
AGM Notice will be sent to Shareholders in the first quarter of
2024 and that the AGM will be held no later than 30(th) April 2024.
As noted above, a resolution to approve the performance fee
amendments will also be proposed on the same day.
In addition to discussions on the changes to the existing
performance fee and the proposed capital allocation policy, the
Board would welcome Shareholders' feedback on the Company's
existing portfolio and its future investment strategy, including
the approach to crossover situations. Rothschild & Co has been
engaged by the Company to conduct the consultation process and will
be contacting Shareholders with regards to their participation. The
Board asks for Shareholders' full and frank cooperation in order
that the Company can gain a comprehensive insight into views on the
best way forward for Chrysalis.
For further information, please contact:
Media
Montfort Communications: +44 (0) 7976 098 139
Charlotte McMullen / Toto Reissland chrysalis@montfort.london
/
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
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.
APPIX
Details of capital allocation policy
Cash reserve
Both the Board and Portfolio Manager believe that it is
essential to hold a certain level of capital reserve to attend to
the estimated costs of running the Company over a reasonable period
and to fund anticipated follow-on investments into existing
portfolio companies; these requirements are seen as more working
capital in nature. Additionally, they believe it prudent to hold
capital on a more strategic basis, to guard against currently
unknown funding needs in the portfolio, which can increase in times
of economic stress and/ or periods of funding market
dislocation.
The absolute size of the appropriate cash reserve is likely to
change over time, an appropriate cash reserve is currently believed
to be GBP50 million, c.6% of net assets, which compares with a
current total liquidity position of approximately GBP33
million.
Distributions to Shareholders
The Board and the Portfolio Manager are also keenly aware of the
deep discount at which the Company's shares trade versus the NAV
per share, which they believe makes retiring shares an attractive
allocation of capital.
Therefore, having first met the cash reserve requirement, the
Company proposes to prioritise distributions to Shareholders in its
allocation of any cash which becomes available following
realisations. The Board reserves its discretion on the mechanism
for distributions, but currently intends to return capital to
Shareholders by exercising its AGM authority to buy back shares in
the market, equivalent to c.15% of issued share capital and,
conditional on the ongoing discount between the share price and NAV
per share, to continue share buybacks until GBP100 million, c.27%
of the Company's current market capitalisation, has been
distributed.
Ongoing allocations
Thereafter, the Board, following input from the Portfolio
Manager, currently intends that up to 25% of ongoing net realised
cash profits will be distributed through share buybacks, again
subject to the Board's discretion on the mechanism for doing so and
on the prevailing discount.
In proposing this ongoing policy, the Board is seeking to
balance capital allocations between potential further opportunities
to enhance near-term Shareholder returns through buying back shares
and the opportunity to drive long-term returns through continuing
to provide capital in pursuit of the Company's investment
objective. The Portfolio Manager will be setting out more fully its
assessment of the state of the late-stage, private market as part
of its submission for the Company's continuation resolution. In
summary, it believes that the trends which led to the Company's
foundation in 2018 have continued subsequently, and in fact gained
momentum, such that the Company remains an attractive mechanism for
private investors and other market participants to access
late-stage, fast growth businesses which are staying private for
longer.
Details of changes to the performance fee
At present, the Portfolio Manager is entitled to receive a
performance fee, the sum of which equals 20 per cent. of the amount
by which the Company's Adjusted Net Asset Value at the end of a
Calculation Period exceeds the higher of a performance hurdle and a
high water mark and payment of which is subject to certain
conditions relating to realisations (or listings) of investments
within the portfolio. The key proposed revisions to the performance
fee arrangements are summarised as follows:
1. A reduction in the overall performance fee level from 20 per
cent. to 12.5 per cent. of the amount by which the adjusted net
asset value exceeds the higher of the High Water Mark and the
Performance Hurdle (as defined below). The High Water Mark and
Performance Hurdle calculations will continue on the basis
previously calculated since the launch of the Company and neither
will be re-set as a result of the proposed changes. See the section
"Performance fee Calculation" below for a summary of how the
performance fee will be calculated.
2. A cap on the aggregate performance fee payable (as described
below) in respect of any one financial year (or other calculation
period) equal to 2.75 per cent. of the audited Net Asset Value of
the Company as at the end of the immediately preceding Calculation
Period.
3. Save as set out in point 4 below, the performance fee is to
be satisfied in Shares at the Deemed Issue Price, being a price
equal to the higher of:
a) the average daily closing price per Share in the calendar
month to the last Business Day in the relevant Calculation Period;
and
b) the audited Diluted NAV per Share as at the end of the
relevant Calculation Period.
4. The performance fee may be satisfied in cash in the following circumstances:
a) in respect of any Covered Tax Liabilities, being (i) any
corporation tax required to be paid by the Portfolio Manager in
respect of the relevant Performance Fee Amount (or equivalent
amounts payable on termination of the Portfolio Management
Agreement or liquidation of the Company (respectively a
"Termination Performance Fee Amount" and "Liquidation Performance
Fee Amount")); (ii) any employer national insurance contributions
and apprenticeship levy (or any equivalent amount payable in any
jurisdiction outside the United Kingdom) which are required to be
paid by the Portfolio Manager or any of its affiliates; and (iii)
any employee PAYE or national insurance contributions (or any
equivalent amount payable in any jurisdiction outside the United
Kingdom) which are required to be paid by the Portfolio Manager or
any of its affiliates as an employer ("Employee Taxes") in respect
of the relevant Performance Fee Amount or in respect of a
Termination Performance Fee Amount or a Liquidation Performance Fee
Amount or any Share Transfer made on or around the Initial Payment
Date or a Subsequent Payment Date or the Termination Date or
Liquidation Commencement Date (as applicable), in each case
calculated net of any cash tax saved (or that will be saved in the
then current accounting period for tax purposes) as conclusively
determined by the Portfolio Manager by virtue of obtaining and
utilising any Relief arising in connection with the relevant
Performance Fee Amount, Termination Performance Fee Amount,
Liquidation Performance Fee Amount or Share Transfer;
b) where the performance fee is payable in respect of stub
financial periods in which the Portfolio Management Agreement is
terminated (other than for the Portfolio Manager's cause) or in
which the Company enters liquidation;
c) to the extent that the Company is limited or prohibited from
issuing Shares, or the Escrow Agent is prohibited from transferring
Escrow Shares, to the Portfolio Manager or its Designates (each as
defined below) by any applicable law or regulation;
d) to the extent that the acquisition of the Shares would
require the Portfolio Manager or any member of the Portfolio
Manager's team (individually or as in concert with other parties)
to make a mandatory bid for the Company under Rule 9 of the City
Code on Takeovers and Mergers; and/or
e) where applicable, if the Company does not have authority to
issue the relevant Shares on a non-pre-emptive basis by the
Business Day immediately following the next annual general meeting
of the Company.
5. The introduction of a revised deferred settlement structure,
whereby (subject to the cap described in paragraph 2 above and cash
payments to be made as described in paragraph 4 above) 25 per cent.
of the Shares due for any period where a performance fee is to be
paid will be immediately issued to the Portfolio Manager or its
Designates (such date being the "Initial Payment Date"), with the
remaining 75 per cent. of the payment being issued to an escrow
agent as may be agreed by the Portfolio Manager and the Company
from time to time (the "Escrow Agent"). Subject to the test set out
in point 6 below and other limitations imposed on the release of
Escrow Shares by the Portfolio Management Agreement, up to 25 per
cent. of the Performance Fee Amount in respect of a Calculation
Period shall be released to the Portfolio Manager or its Designates
on or around each of the first, second and third anniversaries of
the Initial Payment Date (each a "Subsequent Payment Date"). The
Company has undertaken to procure that no voting rights attaching
to Escrow Shares which are held by the Escrow Agent for the benefit
of the Company (until such time as they are transferred to the
Portfolio Manager or its Designates or repurchased by the Company
for cancellation in accordance with the terms of the Portfolio
Management Agreement), are exercised by the Company. Dividends or
other distributions payable on any such shares shall be renounced
by the Company in favour of other Shareholders.
6. The release of Escrow Shares by the Escrow Agent to the
Portfolio Manager or its Designates shall be dependent on whether,
on the relevant Subsequent Payment Date, the average daily closing
price per Share in the calendar month to 30 September in the
relevant year is equal to or greater than the audited Diluted NAV
per Share as at the end of the relevant Calculation Period in which
the Performance Fee Amount first accrued (the " First Condition ").
If the First Condition is satisfied on a Subsequent Payment Date,
the full amount of Escrow Shares available at that Subsequent
Payment Date (being an amount equal to 25 per cent. of the
Performance Fee Amount corresponding to the relevant Calculation
Period) will be transferred. In the event that the First Condition
is not satisfied on this Subsequent Payment Date, if the average
daily closing price per Share in the calendar month to 30 September
in the relevant Calculation Period is higher than the Diluted NAV
per Share which is attributable to the calculation of the
immediately preceding Performance Fee (for this purpose "NAV-1")
then a proportion of the Escrow Shares will be released. The amount
of the total Escrow Shares to be released as at that Subsequent
Payment Date will be 25 per cent. of the Performance Fee Amount
reduced by a pro rata amount according to the calculation:
(Relevant Share price minus NAV-1) / (Diluted NAV per Share at
end of relevant Calculation Period minus NAV-1).
7. If there are any unreleased Escrow Shares as a result of the
condition set out in paragraph 6 above not being satisfied in full
or in part following the third Subsequent Payment Date in relation
to the relevant Calculation Period, then such Escrow Shares shall
be transferred to the Portfolio Manager or its Designates on the
fifth anniversary of the relevant Initial Payment Date if the
average daily closing price per Share in the calendar month to the
last Business Day in the relevant year (i.e. the date of the fifth
anniversary of the Initial Payment Date) is equal to or greater
than the sum of the audited Diluted NAV per Share as at the end of
the relevant Calculation Period in which the performance fee first
accrued, increased by 8 per cent. (calculated as an annual rate and
adjusted to the extent the Calculation Period is greater or shorter
than one year).
8. The Portfolio Manager is required to allocate the Shares
solely to the members of the management team (meaning existing or
future officers and employees of the Portfolio Manager engaged to
perform the services to the Company specified in the Portfolio
Management Agreement) to ensure alignment of the management team
with the Company's Shareholders. No automatic clawback rights exist
in relation to Shares issued or transferred in satisfaction of
performance fees payable by the Company and so, if a member of the
management team ceases to provide services to the Company under the
Portfolio Management Agreement, then that person shall be entitled
to retain any Shares which they hold (subject to any private
arrangements which may exist from time to time between the
Portfolio Manager and the members of the management team).
9. Unless otherwise approved in writing by the Company, if the
Portfolio Management Agreement (as amended) is terminated:
a) by the Company for the Portfolio Manager being in breach of
certain provisions of the Portfolio Management Agreement (including
any unremedied material breach of the Portfolio Management
Agreement by the Portfolio Manager); or
b) by the Portfolio Manager (other than for the Company's breach
of certain provisions of the Portfolio Management Agreement
including any unremedied material breach of the Portfolio
Management Agreement by the Company),
the Portfolio Manager shall immediately cease to be entitled to
the transfer of any Escrow Shares (or equivalent cash alternative,
as contemplated).
10. If the Portfolio Management Agreement is terminated other
than as set out above:
a) a performance fee calculation shall be made in respect of the
incomplete Calculation Period in which termination occurs. The
performance fee (if payable) in such circumstances shall be payable
in cash on the date of termination of the Portfolio Management
Agreement (the "Termination Date") in full (i.e. without deferral);
and
b) calculations shall be made to determine whether or not any
Escrow Shares (or cash equivalent) are to be released to the
Portfolio Manager or its Designates. For each tranche of Escrow
Shares (a tranche being all Escrow Shares relating to a particular
Calculation Period), if the average daily closing price per Share
in the 20 Business Days to the Termination Date is equal to or
greater than the audited Diluted NAV per Share as at the end of the
relevant Calculation Period in which the Performance Fee Amount
first accrued in respect of that tranche of Escrow Shares, all
Escrow Shares of that tranche will be transferred to the Portfolio
Manager on the Termination Date. To the extent that any such Escrow
Shares are not transferred to the performance hurdle on the
Termination Date, such Escrow Shares shall become Stale Shares.
11. If an order has been made or an effective resolution passed
for the winding-up or liquidation of the Company (except a
voluntary liquidation for the purpose of reconstruction or
amalgamation upon terms previously consented to in writing by the
Portfolio Manager, such consent not to be unreasonably withheld or
delayed) then:
(a) a performance fee calculation shall be made in respect of
the incomplete Calculation Period in which the liquidation event
occurs. The performance fee (if payable) in such circumstances
shall be payable in cash on the date falling two Business Days
prior to the commencement of the liquidation or winding-up (the "
Liquidation Commencement Date ") (the " Liquidation Payment Date ")
in full (i.e. without deferral); and
(b) calculations shall be made to determine whether or not any
Escrow Shares (or cash equivalent) are to be released to the
Portfolio Manager or its Designates. For each tranche of Escrow
Shares (a tranche being all Escrow Shares relating to a particular
Calculation Period), if the average daily closing price per Share
in the 20 Business Days to the Termination Date is equal to or
greater than the audited Diluted NAV per Share as at the end of the
relevant Calculation Period in which the Performance Fee first
accrued in respect of that tranche of Escrow Shares, all Escrow
Shares of that tranche will be transferred to the Portfolio Manager
on the Liquidation Payment Date. To the extent that any such Escrow
Shares are not transferred to the Portfolio Manager on the
Liquidation Payment Date, such Escrow Shares shall become Stale
Shares,
provided that, in the event that a resolution is not passed (or
an order not made) for the liquidation or the winding-up of the
Company on the Liquidation Commencement Date, the Portfolio Manager
shall procure that all cash and shares paid or transferred to it on
the Liquidation Payment Date are promptly transferred to the Escrow
Account.
12. The Company shall be entitled to designate the following
Escrow Shares as "Stale Shares" and repurchase for cancellation any
such Stale Shares for 1p each in the following circumstances:
a) any Escrow Shares which are not transferred to the Portfolio
Manager or its Designates (as applicable) on or before the
Subsequent Payment Date falling on or around the fifth anniversary
of the Initial Payment Date in respect of the relevant Calculation
Period because (i) the condition set out in paragraph 7 above has
not been satisfied; or (ii) such transfer would be in breach of the
fee cap described in paragraph 2 above;
b) any Escrow Shares which are not transferred to the Portfolio
Manager or its Designates (as applicable) on termination of the
Portfolio Management Agreement as described in paragraph 10 above
or in connection with the liquidation or winding-up of the Company
as described in paragraph 11 above; or
c) any Escrow Shares which would have been transferred to the
Portfolio Manager or any of its Designates (as applicable) in
accordance with the Portfolio Management Agreement, but were not so
transferred because a cash payment was made in respect of the
relevant Performance Fee Amount in one of the circumstances set out
in paragraph 4 above.
Shareholders' attention is drawn to the fact that item 2 above
(relating to a total cap on fees) varies from the proposal set out
in the Company's announcement of 30 November 2022 which accounted
for 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 per cent. in that year.
The Board has carefully considered and endorses the above
variation to the proposed Portfolio Manager's performance fee
arrangements described in the announcement of 30 November 2022.
Performance fee calculation
The following paragraphs within this subsection headed
"Performance fee calculation" describe the terms used in
calculating whether or not a performance fee is payable to the
Portfolio Manager in respect of a Calculation Period. The
conditions for payment of any calculated performance fee are as
described above.
Subject to the passing of the Resolution, under the terms of the
Portfolio Management Agreement the Portfolio Manager shall be
entitled to receive a performance fee, the sum of which shall be
equal to 12.5 per cent. of the amount by which the Adjusted Net
Asset Value at the end of a Calculation Period exceeds the higher
of: (i) the Performance Hurdle; and (ii) the High Water Mark.
Definitions
For the purposes of this Appendix and announcement:
"Adjusted Net Asset Value at the end of a Calculation Period"
shall be the audited NAV in Sterling at the end of the relevant
Calculation Period: (i) plus an amount equal to any Performance Fee
Amount (whether in cash or by the transfer of Escrow Shares at the
applicable Deemed Issue Price) actually paid to the Portfolio
Manager or its Designates in respect of that Calculation Period or
any prior Calculation Period; (ii) plus an amount equal to all
dividend or other income distributions paid to Shareholders that
have been declared and paid on or prior to the end of the relevant
Calculation Period; (iii) minus the amount of any distribution
declared in respect of the Calculation Period but which has not
already reduced the audited NAV; (iv) minus the Net Capital Change
where the Net Capital Change is positive or, correspondingly, plus
the Net Capital Change where such Net Capital Change is negative
(which, for this purpose, includes the Net Capital Change in the
relevant Calculation Period and each preceding Calculation Period);
and (v) minus any increase in the NAV during the Calculation Period
attributable to Investments attributable to C Shares prior to the
conversion of those C Shares;
"Board" the board of Directors of the Company;
"Business Day" a day on which the London Stock Exchange and
commercial banks in London and Guernsey are normally open for
business;
"Calculation Period" means each 12-month period ending on 30
September, (with the first Calculation Period having been the
period commencing on 6 November 2018 and ending on 30 September
2019);
"City Code on Takeovers and Mergers" means the City Code on
Takeovers and Mergers of the UK;
"Company" Chrysalis Investments Limited;
" Deemed Issue Price " means a deemed issue price equal to the
higher of:
(a) the average daily closing price per Share in the calendar
month to the last Business Day in the relevant Calculation Period;
and
(b) the audited Diluted NAV per Share as at the end of the relevant Calculation Period;
(c) "Deed of Amendment" means the deed of amendment to the
Portfolio Management Agreement entered into between the Company and
the Portfolio Manager, subject to Shareholder approval;
"Designate" means an entity nominated by the Portfolio Manager
to receive amounts of cash and/or Shares in settlement of
performance fees payable to the Portfolio Manager under the
Portfolio Management Agreement;
"Diluted NAV per Share" means the net asset value of the Company
divided by the number of Shares in issue (including, for the
avoidance of doubt, any Escrow Shares which have not been
transferred to the Portfolio Manager or its Designates in
accordance with the terms of the Portfolio Management Agreement as
at the date of calculation);
"Escrow Agent" such escrow agent as may be agreed by the
Portfolio Manager and the Company from time to time and acting as
bare trustee for the benefit of the Company;
"Escrow Shares" the Shares to be held in escrow pursuant to the
terms of the Deed of Amendment;
"FCA" the United Kingdom Financial Conduct Authority (or any
successor entity or entities);
"High Water Mark" means the 'Adjusted Net Asset Value at the end
of a Calculation Period' in respect of which a Performance Fee
Amount was last earned (which at the date of this announcement is
251.96 pence);
"Net Asset Value" the value of the assets of the Company less
its liabilities determined in accordance with the accounting
policies and principles adopted by the Board from time to time;
"Net Capital Change" equals I minus R, where:
"I" is the aggregate of the net proceeds of any Share issue over
the relevant period (other than the first issue of Ordinary Shares
and any issue of Shares pursuant to the terms of the Portfolio
Management Agreement); and
"R" is the aggregate of amounts disbursed by the Company in
respect of Share redemptions or repurchases over the relevant
period (except redemptions or repurchases of any Escrow Shares
designated by the Company as "Stale Shares" pursuant to the terms
of the Portfolio Management Agreement);
"Net Proceeds of the Initial Issue" means the net proceeds of
the Initial Issue, where:
"Initial Issue" means the initial placing, the intermediaries
offer and the offer for subscription, as contemplated by the
prospectus of the Company dated 11 October 2018; and
"Gross Issue Proceeds" means the aggregate value of the Ordinary
Shares issued under the Initial Issue at the Initial Issue
price;
"Listing Rules" the listing rules made by the FCA under section
73A of FSMA;
"Ordinary Shares" ordinary shares in the capital of the Company
from time to time;
"Performance Fee Amount" means in relation to a Calculation
Period, the performance fee calculated as being payable in
accordance with the Portfolio Management Agreement;
"Performance Hurdle" means, in relation to each Calculation
Period, (A multiplied by B) + C, where: "A" is 8 per cent.
(expressed for the purposes of this calculation as 1.08)
(calculated as an annual rate and adjusted to the extent that the
Calculation Period is greater or shorter than one year);
"B" is:
(a) in respect of the first Calculation Period, the Net Proceeds of the Initial Issue; or
(b) in respect of each subsequent Calculation Period, the sum of
this calculation as at the end of the immediately preceding
Calculation Period: (a) excluding any changes made pursuant to
paragraphs (i) and (ii) below in that preceding Calculation Period;
and (b) plus (where such sum is positive) or minus (where such sum
is negative) the Net Capital Change attributable to share issues
and repurchases in all preceding Calculation Periods (the amount in
this paragraph (b) being the "Aggregate NCC"),
in each case, plus (where such sum is positive) or minus (where
such sum is negative) the sum of:
(i) in respect of each Share issue undertaken in the relevant
Calculation Period being assessed (other than any issue of Shares
pursuant to the terms of the Portfolio Management Agreement), an
amount equal to the Net Capital Change attributable to that Share
issue multiplied by the sum of the number of days between admission
to trading of the relevant Shares and the end of the relevant
Calculation Period divided by 365 (such amount being the "Issue
Adjustment"); minus
(ii) in respect of each repurchase or redemption of Shares
undertaken in the relevant Calculation Period being assessed (other
than redemptions or repurchases of any Stale Shares pursuant to the
terms of the Portfolio Management Agreement), an amount equal to
the Net Capital Change attributable to that Share purchase or
redemption multiplied by the number of days between the relevant
disbursement of monies to fund such repurchase or redemption and
the end of the relevant Calculation Period divided by 365 (such
amount being the "Reduction Adjustment"); and
"C" is the sum of: the Issue Adjustment for the Calculation
Period; the Reduction Adjustment for the Calculation Period; and
the Aggregate NCC multiplied by -1.
"Portfolio Management Agreement" the portfolio management
agreement between the Company and the Portfolio Manager dated 1
July 2022, or any replacement thereof between the Company and an
entity controlled by Richard Watts and Nick Williamson ;
"Relief" means any relief, exemption, allowance, set-off,
deduction or credit relevant to the computation of any liability to
make a payment of or relating to corporation tax or any repayment
of or saving of corporation tax;
"Shares" Ordinary Shares of no par value each in the capital of
the Company;
"Shareholders" the holders of Shares;
"Share Transfer" means the allocation or transfer of any Shares
received by the Portfolio Manager or its Designates to any member
of the Portfolio Manager's investment management team pursuant to
the terms of the Portfolio Management Agreement;
"Stale Shares" Escrow Shares designated by the Company as "Stale
Shares" in accordance with the terms of the Portfolio Management
Agreement and which may therefore be repurchased by the Company for
cancellation for consideration of 1p each; and
"United Kingdom" or "UK" means the United Kingdom of Great
Britain and Northern Ireland.
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END
UPDFFESMDEDSEES
(END) Dow Jones Newswires
October 13, 2023 02:30 ET (06:30 GMT)
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