Chrysalis Investments has reported a 22% decline in the net asset value of its fund, attributed to the revaluation of fintech companies within its portfolio.
The firm, which holds stakes in Klarna, Wise, and Starling Bank, explained that these valuations have been adversely affected by historical inflation rates and significant interest rate increases.
Klarna, a major player in the buy-now-pay-later (BNPL) sector, saw its valuation drop by 78%, reflecting a recent downround completed in mid-June. Similarly, Wise’s share price fell 40% to 297.4p at the end of June due to challenging market conditions. Although Starling recently received a £10 million investment from Chrysalis and provided a positive trading update, the declining valuations of its listed peers led to a downward adjustment in Starling’s value.
Despite these challenges, Chrysalis maintains a positive outlook in its trading update, noting a rebound in equity markets and strong performance from benchmark peer companies since the end of the period. For Klarna, the firm points to significant increases in shares for Affirm (up 72%) and PayPal (+39%). Wise’s share price has also risen above its 31 March level of 495p, closing at 541.6p on 18 August, thanks to a robust trading update.
Co-portfolio managers Richard Watts and Nick Williamson remarked, “We are encouraged that our NAV outturn was consistent with the 23% Nasdaq decline in Q2, especially given that our second-largest holding was marked down by nearly 80%.
“Equity markets have rebounded strongly since 30 June, and we have observed the impressive performance of several listed peers that we benchmark against. This momentum has already led to one of our portfolio assets successfully raising capital at a premium to its previous funding round, which should result in future NAV growth if these gains are maintained.”