TIDMCHRY
RNS Number : 0427S
Chrysalis Investments Limited
11 July 2022
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is not for publication, release or distribution in the United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 to professional investors in the Republic of Ireland),
Canada, Australia, Japan or the Republic of South Africa.
11 July 2022
Chrysalis Investments Limited ("Chrysalis" or the "Company")
Portfolio Update
Today, the Company can report that Klarna Holding AB ("Klarna")
has announced an $800m funding round that values the company at
$6.65 billion post new money.
The round, which was larger than anticipated, was led by Sequoia
Capital and has been undertaken at a valuation that represents a
material discount to the Company's current carrying value of the
asset. Other investors in the round include Silver Lake and
Commonwealth Bank of Australia, both existing investors, and new
investors such as Mubadala Investment Company and the Canadian
Pension Plan Investment Board.
The Company's Investment Adviser believes the current valuation
to be very attractive, and the Company has therefore committed to
its pro-rata entitlement of $8.7 million. Consequently, the Company
will not suffer any dilution of its holding because of this funding
round.
The Company first invested in Klarna in August 2019 at a
post-money valuation of $5.5 billion, with an EV/Sales multiple of
approximately 6.7x. In 2019, Klarna generated revenues of $753m and
a +20% rate of growth. The company had a very strong market
position in the Nordics and Germany but had not fully proven its
ability to penetrate some of the largest ecommerce markets
globally, including the US, UK and Asia.
Since our initial investment, Klarna has achieved the following
milestones:
-- Revenues have grown from $753 million in 2019 to $1.6 billion in 2021 (+112%).
-- Gross Merchandise Volume (GMV) processed has increased by $45 billion (to $80 billion).
-- The number of Global Active Users has increased from 60 million to 150 million (+150%).
-- The number of users in the US has increased to 27 million (+700%).
-- The number of merchants using Klarna has increased from 130k to 400k (+167%).
-- 10 new markets have been entered and Klarna is now present in 45 countries globally.
-- The company has acquired Pricerunner, Hero, Inspirock, APPRL and Stocard.
-- A global partnership with Stripe was announced in October 2021 giving access to millions more small-to-medium sized businesses.
Over the past three years, Klarna has grown into a global
payments business with a dominant market position in several
territories. The company's rate of growth has accelerated, and the
customer and merchant base has expanded materially. Innovative
products and services have continued to be rolled out across new
and growing verticals such as travel, event ticketing, beauty, and
high-frequency verticals such as pharmacy and grocery.
The current valuation of $6.7 billion implies an EV/Sales
multiple of approximately 3.0x; this represents a discount of over
30% to Affirm's EV/Sales multiple and a 55% derating versus our
initial entry valuation. Some investors view Affirm as Klarna's
closest listed peer.
Richard Watts (co-portfolio manager) comments:
"The current funding round does not reflect Klarna's progress
since our initial investment, it reflects the very attractive terms
that providers of capital are demanding against the current
macroeconomic backdrop. We remain extremely positive on the outlook
and potential of this business and believe that Klarna now has
sufficient capital to reach profitability, whilst continuing to
grow strongly."
Company Update
As announced on 23 May 2022, the Company's net asset value
("NAV") per ordinary share was 211.76p as of 31 March 2022.
It is estimated that the revised valuation of the Company's
investment in Klarna due to this funding round, along with the
movement of listed assets and FX post-period end, would result in a
decrease in the NAV per ordinary share of approximately 32p as
compared to the Company's last reported NAV per ordinary share. The
resulting NAV would therefore be 179.50p
Note that 45% of the portfolio is currently profitable and 51%
of the portfolio is now either profitable or has sufficient cash to
reach profitability. The remaining 44% of the portfolio, excluding
cash, has approximately 15 months of runway without raising further
capital.
Cash Update
As of 7 July 2022, the Company held approximately GBP51m of
cash. In addition, the Company also has significant further
liquidity available, most notably its holdings in listed assets,
which currently total approximately GBP64m.
Portfolio Composition
As of 7 July 2022, the portfolio composition was as follows:
Portfolio Company % of portfolio
Starling 25.1%
--------------
Wefox 13.3%
--------------
Smart Pension 10.6%
--------------
The Brandtech Group 10.5%
--------------
Graphcore 6.1%
--------------
Klarna 5.5%
--------------
Featurespace 3.8%
--------------
Tactus 3.7%
--------------
InfoSum 3.3%
--------------
Deep Instinct 3.2%
--------------
Sorted 2.7%
--------------
Wise 2.3%
--------------
Revolution Beauty 1.9%
--------------
THG 1.7%
--------------
Secret Escapes 1.5%
--------------
Growth Street 0.0%
--------------
Rowanmoor 0.0%
--------------
Cash 4.8%
--------------
Source: Jupiter Investment Management Limited. Holding sizes, as
of 7 July 2022, are calculated using 31 March valuations, adjusted
for FX as of 7 July 2022 and capturing transactions concluded post
the NAV calculation period, and thus using cash as of 7 July. For
listed shares, the holding values are based on closing share prices
as of 7 July, namely: THG at 82p; Wise at 351p; and Revolution
Beauty at 73p. Due to rounding the figures may not add up to 100%.
The above percentages are based on an aggregate portfolio value
(including cash) of approximately GBP1.07 billion.
-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:
James Simpson +44 (0) 20 3817 1696
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
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END
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