TIDMCHRY
RNS Number : 8010T
Chrysalis Investments Limited
29 November 2021
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is not for publication, release or distribution in the United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 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 as amended by The
Market Abuse (Amendment) (EU Exit) Regulations 2019.
29 November 2021
Chrysalis Investments Limited ("Chrysalis" or the "Company")
Quarterly NAV Announcement and Trading Update
Net Asset Value
The Company announces that as at 30 September 2021 the unaudited
net asset value ("NAV") per ordinary share was 251.96 pence.
The above NAV calculation is based on the Company's issued share
capital as at 30 September 2021 of 547,273,076 ordinary shares of
no par value.
September's NAV represents a 7.7% increase since 30 June 2021.
Whilst the quarter to September was relatively quiet in terms of
funding rounds, the portfolio saw continued, significant revenue
growth. The following investee companies were the most significant
drivers of NAV movement in the quarter:
-- Starling Bank Limited ("Starling") - which continues to
deliver exceptional growth and made its first acquisition in the
period to build out its origination capabilities. Post period end
Standard Chartered Bank ("Standard Chartered") launched a green
investment proposition at COP26- Shoal - powered by Starling's
Banking-as-a-Service ("BaaS") offering;
-- Wise plc ("Wise") - which successfully debuted on the London
Stock Exchange via a direct listing IPO in early July 2021. Over
the quarter to September 2021, the shares rose 35% from their
closing auction price.;
-- Klarna Holding AB ("Klarna") - where growth continued to be
strong, with the US delivering more than 300% Gross Merchandise
Volume ("GMV") growth in the first three quarters of 2021 (in US
dollar terms). The US currently has Buy Now, Pay Later ("BNPL")
penetration of only 2%, compared to 5% in the UK, 10% in Australia
and 23% in Sweden (Source: Statista); and
-- THG plc ("THG") - which saw its market price fall from 610p
as of June 2021, to 507p as of September 2021. Further declines
occurred post period end which are discussed in more detail
below.
Overview
The trading performance of the portfolio over the period
continued to be robust and, as the Company's Investment Adviser
sees a strong link between revenue growth and subsequent valuation
performance of assets within the portfolio, it believes this bodes
well for the prospects of the Company's investments.
Portfolio activity
Following a GBP300m capital raise by the Company earlier in the
year, considerable investment activity continued over the quarter.
In particular, four new investments were undertaken and one
realisation announced:
-- in July a $67m investment in cybersecurity asset, Deep
Instinct, was made. Deep Instinct is the only company addressing
the cybersecurity market with a deep learning product, versus
machine learning, which allows greater than 99% accuracy on
previously unknown threats and sub 20 millisecond response times.
This means it can be deployed as a prevention tool, rather than a
reactive response offering;
-- in July, the Company invested approximately GBP45m in
Revolution Beauty Group plc ("Revolution Beauty") as part of its
IPO. Revolution Beauty's core offering is colour cosmetics, and it
operates a "digital first" strategy. Its share price has softened
since admission, reflecting investor concerns over industry-wide
headwinds in e-commerce, albeit trading has been in-line with
expectations;
-- in July, Embark announced its sale to Scottish Widows Group
Limited (a part of Lloyds Banking Group plc) for GBP390m, subject
to regulatory approval;
-- in August, a $65m investment was made in the parent company
of InfoSum as part of its Series B scale up round. InfoSum is a
data infrastructure company that allows organisations to share data
with each other, without putting customer data or personally
identifiable information at risk. Recent trading results from a
number of tech platforms have shown the impact of Apple's decision
to give its customers the right to privacy, effectively curtailing
the effectiveness of third-party advertising campaigns. InfoSum's
technology has been designed to allow entities the ability to
"enrich" their own datasets, without falling foul of growing
privacy awareness by consumers, as well as regulation, such as
GDPR; and
-- in August, the Company made a GBP40m investment in Tactus
Holdings Limited ("Tactus"). Tactus is a consumer technology
expert, supplying a range of own and third-party branded IT
hardware, predominantly entry-level laptops and high-end gaming
PCs, to consumers. There is a substantial opportunity to supplement
organic growth with M&A.
Portfolio news
The Investment Adviser believes the most notable news, given the
size of the current investment, was the announcement post period
end of a strategic partnership between Klarna and Stripe, which
will allow retailers using Stripe to activate Klarna in their
checkouts within minutes. Initial results from Stripe retailers
using Klarna indicate an average 27% increase in sales, with some
retailers experiencing up to 40% of Klarna shoppers being new to
their brand. It is estimated Stripe processed approximately $350bn
of GMV in 2020 (Source: https://backlinko.com/stripe-users), versus
Klarna's GMV of $53bn in the same year.
Activity in the BNPL space over the course of 2021 has been
significant, namely:
-- Square's acquisition of Afterpay for $29bn;
-- Amazon's partnership with Affirm (the latter's share price
has risen by approximately 100% since, to 19 November 2021);
and
-- PayPal's acquisition of Paidy in Japan for $2.7bn.
In combination with Klarna's continued strong progress - GMV
growth (in USD) of 63% over the first three quarters of 2021,
driven by the US - the Investment Adviser believes the
ramifications of the Klarna/Stripe relationship could prove
material to the way investors consider Klarna's valuation.
Elsewhere, Deep Instinct announced a partnership with Tanium
that we believe could be very significant. Tanium manages endpoints
for nearly half of the Fortune 100, and this relationship will see
Deep Instinct integrated into its Threat Response solution, thereby
offering a new, major route to market.
Significant activity occurred at Starling. Following the
successful fund raise earlier in the year, Starling bought Fleet, a
buy-to-let mortgage lender, which marks the first move into
mortgage origination. In addition, it announced its intention to
launch "Banking-as-a-Service" (BaaS) into Europe, which will offer
the opportunity to supplement traditional banking revenue streams
with high-value, recurring income. Post period end, Standard
Chartered launched its new green savings platform, Shoal, at COP26,
which is powered by Starling's BaaS offering. Standard Chartered
expects to expand Shoal into Europe in due course. In July it was
named the "Best British Bank" for the fourth year running and
recently committed to offsetting its carbon emissions from 2021,
alongside other ESG commitments.
Tactus was active on the M&A front, acquiring two businesses
- BIST and Chillblast - to further build out its offering. M&A
was one of the rationales for it raising primary capital on the
Company's initial investment, and therefore early execution in this
regard is encouraging.
THG
THG's share price fell from 610p as of the 30 June 2021 NAV
statement to 507p as of 30 September 2021. Post period end, the
share price suffered further heavy selling pressure falling below
200p in November. In the normal course of business, the Investment
Adviser would not expect to comment on individual names in detail,
but given the magnitude of this move, feels some commentary is
appropriate. While well documented, the reasons appear to centre
around:
-- concerns over corporate governance;
-- uncertainty surrounding the possible exercise of the SoftBank
option to buy 19.9% of Ingenuity and the implicit GBP4.5bn
valuation of the division, as well as prospects for its future
growth; and
-- a modest, mainly FX driven downgrade to EBITDA.
In response, THG has:
-- made several moves designed to improve corporate governance,
including: a commitment to rescind the founder's Golden Share,
which effectively prevents an unwanted takeover in the next two
years, and splitting the role of CEO and Chairman, with a process
underway to identify an independent candidate to fill the
latter;
-- appointed a SoftBank representative to its board; and
-- upgraded expectations for Ingenuity growth.
As the representative of major shareholders, the Investment
Adviser has engaged with the company to support its plans,
particularly in respect of corporate governance, and is encouraged
by the company's optimism surrounding Ingenuity. As part of its
normal process, the Investment Adviser has revisited its investment
case and believes there has been no substantive change to the
investment thesis since IPO. Given the current valuation, the
Investment Adviser believes there is significant upside potential
in THG shares. As a result, it has increased the Company's position
in THG following the quarter end.
The Company also notes the Wise share price has fallen by
approximately 29% since the end of the period.
Cash Update
As of 24 November 2021, the Company has approximately GBP24m of
cash available. In addition, the Company also has significant
further liquidity available, most notably its holdings in listed
assets, which currently total approximately GBP147m, and, subject
to regulatory approval being provided, the Company will receive its
share of the proceeds from the sale of its shareholding in Embark.
In regards to the latter, the Investment Adviser notes comments
from Lloyds Bank plc suggesting this might take place in 4Q21.
Portfolio Composition
As of 24 November 2021, the portfolio composition was as
follows:
Portfolio Company % of investment portfolio
Klarna 27.6%
--------------------------
Starling Bank 15.5%
--------------------------
wefox 7.8%
--------------------------
You & Mr Jones 7.1%
--------------------------
Smart Pension 6.5%
--------------------------
Wise 5.1%
--------------------------
Graphcore 4.6%
--------------------------
Embark 4.2%
--------------------------
InfoSum 3.6%
--------------------------
Deep Instinct 3.6%
--------------------------
THG 3.1%
--------------------------
Tactus 2.9%
--------------------------
Revolution Beauty 2.7%
--------------------------
Featurespace 2.6%
--------------------------
Secret Escapes 1.8%
--------------------------
Sorted 1.3%
--------------------------
Growth St 0.1%
--------------------------
Cash 1.8%
--------------------------
Source: Jupiter Investment Management (UK) Limited. Holdings
size, as of 24 November 2021, are calculated using 30 September
valuations, adjusted for FX as of 24 November 2021 and capturing
transactions concluded post the NAV calculation period, and thus
using cash as of 24 November. For listed shares, the holding values
are based on closing share prices as of 24 November 2021, namely:
THG at 182.9p; Wise at 729p; and Revolution Beauty at 129.5p. Due
to rounding the figures may not add up to 100%.
Investment Adviser alignment
Based on the performance of the Company's assets, which is still
subject to final audit, there is likely to be a performance fee
payable for the year, which historically has been paid in cash. In
order to further strengthen the alignment of the Company's
portfolio management team with the subsequent performance of
Chrysalis, and also to retain cash in the Company, the portfolio
management team of the Investment Adviser has elected, with the
agreement of the Investment Adviser and the Board, to take the
deferred element of its remuneration in new Chrysalis shares to be
directly issued by the Company.
The portfolio management team has agreed for this year to have
shares issued to it at the closing share price as of 30 September
2021 of 267p, a premium to NAV, which reflects the team's
confidence in the prospects for the portfolio, as discussed below.
Further details on this have been separately announced by the
Company today.
Outlook
The late-stage, private market continues to grow and develop.
Over the nine months to September 2021, fund raising in the
Company's target European markets hit GBP38 billion (Source:
Pitchbook), more than double the year to December 2020.
Participation in this space by a major crossover investor has
roughly doubled over the last two years (measured as number of
deals with crossover participation), showing the growing interest
in this type of financing by companies, and recognition from
investors that late-stage investing offers significant
opportunity.
Chrysalis is exceptionally well placed to take advantage of this
growing market, given its established track record and origination
capability.
The portfolio continues to exhibit exceptional growth metrics,
substantially outperforming listed indices. Over the last two
years, the Investment Adviser estimates the portfolio has
compounded out its revenue growth at approximately 3 times that of
the NASDAQ, while the FTSE All Share has seen revenues decline by
11% (Source for indices: Peel Hunt).
The Investment Adviser believes revenue growth is the key driver
of valuation in the medium-term, and so ensuring a continuation of
growth is a key focus.
An analysis of the Total Addressable Market ("TAM") of the
Company's portfolio suggests a revenue opportunity of over $1
trillion, with current penetration of less than 1%. Given the
underlying markets making up this portfolio TAM are typically
growing, and the ability of most Chrysalis investee companies to
address adjacent verticals via technology, the Investment Adviser
has considerable confidence that portfolio revenue growth will
continue to be robust.
Investment Adviser Comments
Nick Williamson and Richard Watts (co-portfolio managers)
comment:
"NAV growth in the quarter continued to be robust. While we saw
limited activity in terms of funding rounds in the period,
considerable progress and growth was achieved by several of the
portfolio companies that underpinned the NAV performance.
Typically, growth remains strong across our investee companies, and
in some cases is exceptional. In addition, for some of our larger
units, we believe valuations look undemanding versus listed peers,
particularly given their growth rates.
Our origination process has grown in capability over the course
of the year and the pipeline remains strong. We currently have two
modest follow-ons that we are likely to be making before year end,
and continue to receive numerous opportunities concerning potential
new investments.
With a portfolio of potent growth companies, we remain
optimistic regarding prospects for the Company in the year
ahead."
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 +44 (0) 7542 846 844
Montfort Communications chrysalis@montfort.london
Charlotte McMullen / Georgia
Colkin / Lesley Kezhu Wang
Jupiter Asset Management:
Magnus Spence +44 (0) 20 3817 1325
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
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.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
RNS may use your IP address to confirm compliance with the terms
and conditions, to analyse how you engage with the information
contained in this communication, and to share such analysis on an
anonymised basis with others as part of our commercial services.
For further information about how RNS and the London Stock Exchange
use the personal data you provide us, please see our Privacy
Policy.
END
NAVKVLFLFFLXFBX
(END) Dow Jones Newswires
November 29, 2021 02:00 ET (07:00 GMT)
Merian Chrysalis Investm... (LSE:MERI)
Graphique Historique de l'Action
De Avr 2024 à Mai 2024
Merian Chrysalis Investm... (LSE:MERI)
Graphique Historique de l'Action
De Mai 2023 à Mai 2024