Chrysalis stock jumps on Klarna and Starling upgrades

Chrysalis stock has jumped by more than six per cent this morning after its private equity holdings, including Klarna and Starling Bank, saw significant upgrades to their valuations.

The private equity trust’s underlying assets rose 11 per cent to 156p per share in the last quarter of 2024, it said in a trading update today.

Starling Bank, which makes up 29 per cent of Chrysalis’ portfolio, rose 10 per cent thanks to share price increases in comparable companies.

Klarna’s value also rose just over 10 per cent, with Chrysalis investing an extra £8m in the company. The fintech firm now makes up 15 per cent of the trust’s portfolio.

Deutsche Numis analyst Gavin Trodd estimated that Klarna had been valued at around $16bn (£12.98bn) based on the upgrade, despite press reports that the firm was considering a $20bn (£16bn) valuation.

“The portfolio is highly concentrated meaning it is high risk, but also has the potential for large gains, especially if Klarna successfully IPOs this year,” said Stifel analysts Will Crighton and Iain Scouller.

Chrysalis also made a further £17m investment in Berlin-based insurtech Wefox, while the firm’s valuation rose 35 per cent due to a reassessment of capital flows and a reassessment of the “downside scenario”.

Only one of Chrysalis’ holding saw a “sizeable fall in value”, noted the Stifel analysts: Luxury travel agent Secret Escapes , which fell 21 per cent over the quarter.

Buybacks from Chrysalis

Following the sale of its stake in fraud detection firm Feasturespace last month, the trust is now sitting on a £141m cash pile.

Chrysalis is using this cash to make buybacks, with £36m returned to shareholders so far, along with a promise that no new investments will be made until £100m has been returned.

It also pledged that if it sells any other parts of its portfolio, at least 25 per cent of the net realised gains will be returned to shareholders.

In addition, the greater amount of cash is allowing secondary investments to be made if needed, such as with Wefox, noted the Stifel analysts.

“The shares are now trading on a 35 per cent discount this morning… which looks far too cheap given over £60m of buyback capacity left under the capital allocation programme and scope for further liquidity events,” added Numis’ Trodd.

Chrysalis’ board also said it was waiting for a further improvement in the discount before making new investments, meaning it thinks new investments are unlikely until 2026.