In a stock exchange notice today (29 January), the trust reported its December NAV had risen 6.5% from the previous quarter, to 143.4p driven by upwards movement in valuations of Swedish fintech Klarna and digital challenger bank Starling Bank.
Klarna’s valuation was increased from £56.9m at the end of September to £93.2m, with the company now accounting for 10.9% of NAV, while the value of Starling Bank, which comprises 20.2% of NAV, grew from £141.7m in the third quarter to £172.7m.
These revaluations more than offset declines at Brandtech from £103.9m to £93.6m, Deep Instinct from £51.5m to £41.5m and Tactus from £29m to £8m.
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The strong fourth-quarter contrasted with a 8.9% NAV fall in the year to 30 September, 40% of which was attributed to foreign exchange differences and non-asset related costs, alongside valuation declines for Smart Pension, Graphcore, Deep Instinct and Sorted.
Chrysalis’ discount to NAV stood at 54% at the end of the period, but it has narrowed to 41.7% at the time of publication, according to the Association of Investment Companies.
Portfolio managers Richard Watts and Nick Williamson said the trust’s portfolio contains a number of companies that are both mature in scale and are “moving into a window where an exit is a possibility”.
“The recent strength in markets – triggered by yields falling in response to better inflation data – should be seen as encouraging,” they said. “A backdrop of more optimistic markets should increase the possibility of exits for the company’s investments.”
In a Bloomberg interview last week, Klarna CEO Sebastian Siemiatkowski said an IPO is “very likely to happen quite soon”, although he noted “there are no official dates”.
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According to Stifel analyst Iain Scouller, such an event would provide a “useful insight” into Chrysalis’ valuation and potentially offer some cash back to the fund, assuming there are no lock-up restrictions.
Scouller said some cash back would be helpful for sentiment towards the trust, given it currently only has £20m, or 2.3% of NAV, as cash on the balance sheet.
Moreover, he noted the managers’ acknowledgement “there may be additional funding requirements across the portfolio in the short- to medium-term”.
This morning (29 January), Chrysalis also announced its maiden continuation vote would be scheduled for the next annual general meeting on 15 March, which will coincide with an extraordinary general meeting to consider management and performance fee changes.
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