Chrysalis Investments reports December 31, 2022
An abbreviation for net asset value
” class=”glossary_term”>NAV was 128.26p, down 19.53p or 13.2% since 30 September 2022. Four company revaluations rose 11.4p, with currency movements accounting for a further 3.3p of the decline.
It was limited
The invested financial assets a fund such as investment companyinvestment fund or OEIC.
” class=”glossary_term”>Portfolio Activity during the quarter (several companies in the portfolio had raised fresh capital in H1 2022). Chrysalis sold Wise shares for around £5.9m in October and announced in November that it had sold its entire stake in Revolution Beauty for around £5m in an over-the-counter transaction (as its shares were on hold at the time). ).
The advisor believes the companies in the portfolio still have around £20m of funding needs. This compares to net cash of £66m and a position in Wise of £12m as at 30 January 2023. The Investment Adviser estimates that 80% of the portfolio companies are either profitable, financed to profitability or have a two-year liquidity period. It believes that the company remains in strong
Refers to the ease of converting an asset into cash. The opposite of liquidity is illiquidity. In stocks, liquidity often decreases when you want to trade a lot of stocks. Bind and shares are generally considered more liquid than private equity and property. Some investments may be subject to a lock. In this context, liquidity is also applied to the purchase or sale of shares of investment companies.
” class=”glossary_term”>Liquidity able to fund probable capital calls while maintaining a reasonable buffer to deal with contingencies.
Portfolio News
Wefox
wefox had very strong last twelve months. The company generated around €600 million in sales in FY22 and should be profitable within the next twelve months; this would make wefox one of the largest and most profitable insurtech assets worldwide. The company has also matured from a governance perspective, recently announcing the appointment of Helen Heslop as CEO
The board of directors is the collective term for all managing directors of a company. The board is there to protect the interests of shareholders and ensure that the company runs well. read our guide for officers and directors
” class=”glossary_term”>Board as Chair of the Audit Committee and Laura Eschricht as Chief Marketing Officer; This follows several more executive hires across the group throughout 2022.
In October, wefox also announced it would continue its investments in artificial intelligence (AI) and innovation with the opening of a new technology center in Milan, Italy. Already with technology centers in Paris, France and Barcelona, Spain, Wefox uses AI to increase broker productivity and reduce fraud. In Milan, wefox will invent and build new technologies to accelerate its embedded insurance products through its affinity partnerships.
fire tech
Brandtech continues to grow strongly driven by best-in-class
Organic growth, used in the context of a company’s revenue/sales, earnings/profit growth, describes growth that the company has generated from its own resources as opposed to growth that has been generated by buying other companies
” class=”glossary_term”>organic growth and selective M&A. The company recently announced 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 offices worldwide employing 2,250 people. Jellyfish bills itself as a digital partner for some of the world’s leading brands such as Aviva, Duracell, Google and Toyota and has achieved a CAGR of 45% since 2013.
star
In January 2023, Anne Boden – Starling’s CEO – stated that the company had annualized sales of almost £600m for the month of December 2022. This is offset by annualized revenue of £331.2m and PBT of £92m, both as of December 2022 June 2022.
Klara
In November, Klarna announced its results for the third quarter of 2022. Gross merchandise volume (GMV) grew +22% organically to USD 60.2 million in the first nine months of 2022, with the US growing at +92%. The investment adviser sees this as a strong result given a decline in global e-commerce sales, although the company took a more cautious underwriting approach earlier in the year. Depreciation rates as a percentage of GMV decreased to 0.7% sequentially in 3Q22, resulting in a material improvement in operating losses, which decreased by $169 million on a sequential basis in 3Q22. As a result of these encouraging trends, Klarna indicated that it expects to reach run-rate profitability in 2H23.
Klarna also unveiled significant improvements to its mobile app that will offer an even better shopping experience to its 150 million customers worldwide. Klarna has launched a smart, unbiased in-app search tool in the US, UK and Scandinavia, saving consumers time and money by comparing prices across thousands of retailers and offering a credible alternative to the established tech giants. Klarna is now also adding automatically available coupons at checkout in the US and UK, with more markets to come, making saving money effortless and allowing consumers to collect rewards via the digital wallet in the loyalty card app.
feature space
During the quarter, Featurespace continued to win awards for its innovative product, including its partnership with TSYS, which won “Best Use of Payments Data or AI in Financial Services” at the PAY360 Awards.
I’m looking forward to
The investment adviser notes that certain stock markets, including “tech-heavy” ones like the NASDAQ 100, are beginning to show signs of stability. It believes that 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 this
IPO is the abbreviation for initial public offering
” class=”glossary_term”>IPO reopening of the market.
The IPO market has seen four quarters of low issuance over the course of 2022, following a relatively strong year in 2021 compared to recent history. However, there is no guarantee that any of the company’s portfolio companies would consider an IPO, should there be an opportunity in 2023 it may open up that opportunity for some of the later stage assets.
An IPO – which the Investment Adviser sees as an important “exit route” for the company – in the portfolio would significantly improve the company’s cash position and provide a clear underpinning of the valuation for the company in question.
CHRY: Chrysalis NAV falls but adviser hopes for better IPO market
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