Shares in the £582 million growth capital fund Chrysalis surged by 10% following a significant increase in the valuation of its portfolio company, Starling Bank. The stock climbed by 11.4p to reach 123.4p, primarily due to a notable rise in the portfolio’s net asset value after accounting for debts.
Starling Bank now represents 42.3% of Chrysalis’s portfolio, with its valuation increasing from £271 million to £384.7 million over the quarter. The fund’s annual results, ending on March 31, reported a remarkable 37% post-tax return on capital. Fund managers Richard Watts and Nick Williamson emphasized that this performance compares “very favorably” to that of traditional UK banks.
They noted that the sharp increase in Starling’s valuation resulted not only from advancements within the core UK banking operations but also from the first-time inclusion of a valuation for Engine, the bank’s banking-as-a-service technology platform.
Last May, Chrysalis indicated that Starling’s Software as a Service (SaaS) platform could potentially generate hundreds of millions of pounds annually for the digital bank, positioning it toward a £10 billion valuation.
Meanwhile, Klarna, the buy-now-pay-later provider that faced significant valuation challenges in 2022, remains the second-largest holding in the fund, comprising 15% of assets. The value of this stake rose to £136.9 million from £125.7 million as of March 31.