By John Reynolds on Tuesday 23 August 2022
Despite the fall in value of its portfolio, Chrysalis gave an upbeat assessment and noted that equity markets had "rebounded very strongly" after the second quarter.
Fintech investor Chrysalis Investments today (Monday) said the value of its portfolio had plummeted over 22 per cent in the second quarter, after the valuation of Klarna, its previously largest holding, fell substantially while its stakes in other fintechs were hit by weakness in the tech market.
But the listed investment vehicle said that equity markets had “rebounded very strongly” after the second quarter and noted the “very strong performance of some of the listed peers we benchmark our portfolio assets against”.
Chrysalis, whose investments include Klarna, Starling and Wise, said valuations have been hit by “historic levels of inflation” and “material interest rate rises”.
The NAV (net asset value) of its portfolio was down 22.8 per cent in the quarter between March and June.
Its holding in buy now, pay later fintech Klarna made up 19 per cent of its portfolio.
Klarna’s value has fallen 78 per cent in the period, following its $800m downround funding in July, which Chrysalis invested in.
But Chrysalis said since the funding round, the share price of Klarna’s listed peers has “risen considerably” pointing to shares in PayPal being up 39 per cent.
Despite Starling recently reporting its first full year of profitability, Starling’s valuation was also cut by Chrysalis amid the valuation of its listed peers also falling, Chrysalis said.
Chrysalis invested £10m in Starling’s latest £130.5m funding round.
On money transfer fintech Wise, it said its shares had fallen 40 per cent to the end of June but since then Wise’s share price has railed driven by a strong trading update.
Richard Watts and Nick Williamson (co-portfolio managers), said: "We are encouraged that our NAV outturn was in line with the 23% NASDAQ decline in Q2, particularly when our second largest holding, which represented 19 per cent of the portfolio at the beginning of the period, was marked down by almost 80 per cent.
“The implied write down for the rest of the portfolio is approximately 8 per cent which reflects strong trading, a positive funding round for Wefox and the inherent downside protections we have structured into many of our investments.
“Equity markets have rebounded very strongly since 30 June, and we note the very strong performance of some of the listed peers we benchmark our portfolio assets against.
“This has already been reflected in one of our portfolio assets raising primary capital at a premium to its previous funding round and should lead to future NAV progression if these recent gains are sustained. "
“With over £48m cash and £57m of listed assets, which together represent 20.4 per cent of the market capitalisation, Chrysalis is in a very strong position heading into H2 and we remain confident in the future potential of this portfolio and the outlook of the company.”
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