TIDMCHRY
RNS Number : 4995O
Chrysalis Investments Limited
01 February 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is not for publication, release or distribution in the United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.
1 February 2023
Chrysalis Investments Limited ("Chrysalis" or the "Company")
Quarterly NAV Announcement and Trading Update
Net Asset Value
The Company announces that as at 31 December 2022 the unaudited
net asset value ("NAV") per ordinary share was 128.26 pence.
The above NAV calculation is based on the Company's issued share
capital as at 31 December 2022 of 595,150,414 ordinary shares of no
par value.
December's NAV represents a 19.53 pence per share (13.2%)
decrease since 30 September 2022.
The movement in fair value of the four holdings which declined
the most (on a constant currency basis) during the period
represented 11.40 pence per share of the decrease. Much of this was
driven by the external valuer and the independent Valuation
Committee's transition towards a more "market-based approach", and
away from a "price of recent investment" approach, given the
general market changes and time elapsed since the last funding
round for these assets.
Foreign exchange was the second largest detractor to the NAV
over the period overall, with foreign exchange impacting the NAV
per ordinary share by 3.30 pence per share.
The Board believes that the portfolio valuations as at 31
December 2022 reflect fair value at a time when public markets were
closed, investment into private companies was muted and exit
opportunities were limited (conditions which still prevail today).
The Board remains confident of enhanced valuations when market
conditions are more favourable, particularly in the light of the
positive portfolio developments described below.
Investment Adviser Comments
Richard Watts and Nick Williamson (co-portfolio managers)
comment:
"Over the last twelve months, we have worked hard with our
portfolio companies to get them into the best possible financial
shape, with strengthened balance sheets and lower cash burn
forecasts. While we expect there are still some final investments
to be made, we believe that we are coming to the end of this
process and are confident that our companies are generally in a
strong position to continue growing robustly.
We believe the portfolio is attractively valued versus listed
peers, particularly given its rate of growth. We continue to be
pleased by the overall trading performance of the portfolio and of
the major holdings in particular."
Portfolio Activity
There was limited portfolio activity over the quarter given
several portfolio assets raised primary capital through H1
2022.
The Company sold approximately GBP5.9 million of Wise shares in
October and announced in November that it had sold its entire stake
in Revolution Beauty for approximately GBP5 million in an
off-market transaction (as the shares were suspended at that
point).
As announced at the Company's last quarterly update, the
Investment Adviser estimated that there was a likely further
funding requirement in the portfolio of approximately GBP20
million. This position remains unchanged.
Portfolio News
Wefox
wefox has had a very strong last twelve months. The company
generated approximately EUR600m of revenue in FY22 and should be
profitable within the next twelve months; this would make wefox one
of the largest and most profitable Insurtech assets globally. The
company has also matured from a governance perspective and recently
announced the appointment of Helen Heslop to the board as Chair of
the Audit Committee, and Laura Eschricht as Chief Marketing
Officer; this follows several other senior hires across the group
over the course of 2022.
In October, wefox also announced it would continue its
investment in AI and innovation with a new technology hub opening
in Milan, Italy. Wefox already has technology hubs in Paris, France
and Barcelona, Spain and utilises AI to increase broker
productivity and reduce fraud. In Milan, wefox will invent and
build new technology to accelerate its embedded insurance products
through its affinity partnerships.
Brandtech
Brandtech continues to grow strongly driven by best-in-class
organic growth and selective M&A. The company recently
disclosed that it has entered into exclusive negotiations with
Fimalac to potentially acquire global digital marketing company,
Jellyfish. Jellyfish is headquartered in the UK but has 40 global
offices with 2,250 employees. Jellyfish describes itself as a
digital partner for some of the world's leading brands such as
Aviva, Duracell, Google and Toyota and has generated a compound
annual growth rate of 45% since 2013.
Starling
In January 2023, Anne Boden - Starling CEO - noted that for the
month of December 2022 the company generated annualised revenue of
nearly GBP600 million and PBT of over GBP250 million, with a
deposit book of GBP10.7 billion. This compares with annualised
figures of GBP331.2 million in revenues and PBT of GBP92 million,
both as of June 2022.
Klarna
In November, Klarna announced its 3Q 2022 results. Gross
Merchandise Volume ("GMV") grew +22% organically over the first
nine months of 2022 to $60.2m, with the US growing at +92%. The
Investment Adviser views this as a strong result given a decline in
global e-commerce sales and is despite the company adopting a more
cautious underwriting approach earlier in the year. Impairment
rates fell as a percentage of GMV to 0.7% in 3Q22 from the prior
quarter, which drove a material improvement in operating losses,
which fell $169 million in 3Q22 on a sequential basis.
As a result of these encouraging trends, Klarna stated that it
expects to hit run rate profitability during 2H23.
Klarna also unveiled significant improvements in its mobile app
which will provide an even better shopping experience for its 150
million customers globally. Klarna has launched an intelligent,
unbiased in-app search tool in the US, UK, and the Nordics that
saves consumers time and money by comparing prices across thousands
of retailers, offering a credible alternative to the established
tech giants. Klarna now also automatically adds available coupons
at checkout in the US and UK with further markets to follow, making
money-saving effortless while allowing consumers to collect rewards
through its in-app digital wallet for loyalty cards.
Featurespace
Over the quarter, Featurespace continued to win awards for its
innovative product, including its partnership with TSYS winning the
"Best Use of Payments Data or AI in Financial Services" at the
PAY360 awards.
Cash Update
As of 30 January 2023, the Company had net cash of approximately
GBP66 million and a position in Wise of GBP12 million, to give a
total liquidity position of approximately GBP78 million.
As a result, the Company remains in a strong liquidity
position.
Portfolio composition
As of 31 December 2022, and 30 January 2023, the portfolio
composition was as follows:
31-Dec 30-Jan
Portfolio Company GBPmillions % of portfolio GBPmillions % of portfolio
------------- --------------- ------------- ---------------
wefox 129 17% 128 17%
------------- --------------- ------------- ---------------
Brandtech 98 13% 96 13%
------------- --------------- ------------- ---------------
Starling 93 12% 93 12%
------------- --------------- ------------- ---------------
Smart Pension 90 12% 90 12%
------------- --------------- ------------- ---------------
Deep Instinct 65 9% 64 8%
------------- --------------- ------------- ---------------
Klarna 47 6% 46 6%
------------- --------------- ------------- ---------------
Featurespace 42 5% 42 6%
------------- --------------- ------------- ---------------
Tactus 37 5% 37 5%
------------- --------------- ------------- ---------------
Graphcore 33 4% 33 4%
------------- --------------- ------------- ---------------
InfoSum 28 4% 27 4%
------------- --------------- ------------- ---------------
Secret Escapes 13 2% 13 2%
------------- --------------- ------------- ---------------
Wise 12 2% 12 2%
------------- --------------- ------------- ---------------
Sorted 9 1% 9 1%
------------- --------------- ------------- ---------------
Gross cash 72 9% 69 9%
------------- --------------- ------------- ---------------
Source: Jupiter Investment Management Limited. Holding sizes, as
of 30 January 2023, are calculated using 31 December 2022
valuations, adjusted for FX as of 30 January 2023 and capturing
transactions concluded post the NAV calculation period, settlement
of outstanding management fees and thus using cash as of 30 January
2023. For listed shares, the holding values are based on closing
share prices as of 30 January 2023, namely: Wise at 544.20p. 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 GBP0.77 billion and GBP0.76 billion for 31 December
2022 and 30 January 2023 respectively.
Outlook
As detailed at the recent Capital Markets Day, the portfolio is
well capitalised, with approximately 80% of companies either
profitable, funded to profitability, or with a two-year cash
runway. As detailed above, the Investment Adviser believes that the
Company remains in a strong liquidity position to enable it to fund
likely capital calls, while retaining an adequate buffer with which
to deal with any unforeseen events.
The Investment Adviser notes that medium-term US bond yields
have fallen over the last three months, despite the US yield curve
remaining inverted, suggesting expectations of a recession. While a
recession is typically not a helpful backdrop, the Investment
Adviser believes the growth dynamics of the Company's holdings are
less likely to see an impact, relative to the wider market. In
addition, lower yields are typically supportive of growth
valuations.
With this in mind, the Investment Adviser notes that certain
stock markets, including "tech-heavy" ones such as the NASDAQ 100,
are beginning to show some signs of stability.
The Investment Adviser believes a recovery in market sentiment
and market price levels is likely to have two main effects:
-- It would support portfolio company valuations; and
-- It could lead to the IPO market reopening.
The IPO market has endured four quarters of low issuance over
2022, on the back of a reasonably strong year - relative to recent
history - in 2021. While there is no guarantee that any of the
Company's portfolio companies would look to IPO if there was an
opportunity in 2023, it does potentially open this possibility for
some of the later stage assets.
An IPO - which the Investment Adviser views as an important
"exit" route for the Company - in the portfolio would materially
boost the Company's liquidity position and provide a clear underpin
to valuation for the pertinent company.
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
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:
Elaine Smeja / Aimee Gontier +44 (0) 1481 749364
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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