Anthony Leatham and Markuz Jaffe shifted their stance on the trust due to a combination of “signs of life in the IPO market” and the hefty discount the vehicle trades on, which currently stands at 45.9%, according to data from the Association of Investment Companies.
The analysts argued that the “market has been slow to recognise the potential catalysts on offer” for a portfolio that “typically responds positively to catalysts, either at the portfolio or the company level”.
Chrysalis boosted by Klarna and Starling Bank revaluations as NAV jumps 6.5%
Last month, Chrysalis boosted its net asset value following the revaluation of Starling Bank and Klarna, the latter of which provided the core focus for the Peel Hunt note.
Klarna CEO Sebastian Siemiatkowski recently flagged that a US IPO may happened “quite soon”, which, combined with the cost-cutting exercise begun in Q2 2022 that shifted the firm from loss to profit, has buoyed the potential for a positive exit from the firm.
With a theoretical $18bn exit valuation, Leatham and Jaffe predicted the trust could enjoy a £150m liquidity event.
Chrysalis faces shareholders with continuation and fee votes set for March
The pair were positive on the portfolio more generally, noting the 12 holdings were “well funded”, with the majority either profitable or funded to profitability, while the trust holds enough liquidity to support the portfolio and fund the company for “the foreseeable future”.
Alongside this, the analysts were encouraged the trust’s risk reporting, oversight, valuation policies and committees would remain consistent despite the ongoing departure from Jupiter.
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