The portfolio of the fintech investor Chrysalis Investments falls 22 per cent in the quarter

Despite the drop in value on the portfolio, Chrysalis gave a positive rating, noting that equity markets had “corrected very strongly” after the second quarter.

Image source: Sebastian Siemiatkowski/Klarna.

Fintech investor Chrysalis Investments said today (Monday) that the value of its portfolio had fallen more than 22 per cent in the second quarter, after the valuation of Klarna, its former largest holding, fell significantly while stakes in other fintech companies were hit by weakness in the technology market .

But the listed investment vehicle said equity markets had “rallied very strongly” after the second quarter, noting the “very strong performance of some of the listed peers against which we compare our portfolio assets”.

Chrysalis, whose investments include Klarna, Starling and Wise, said valuations have been hit by “historic levels of inflation” and “significant interest rate increases”.

NAV (net asset value) of the portfolio was down 22.8 per cent in the quarter between March and June.

Its stake in buy-now, pay-later fintech Klarna made up 19 percent of the portfolio.

Klarna’s value has fallen by 78 percent in the period, following the downward financing of 800 million dollars in July, in which Chrysalis invested.

But Chrysalis said since the funding round, the share price of Klarna’s listed companies has “increased significantly”, suggesting PayPal shares are up 39 percent.

Despite Starling recently reporting its first full year of profitability, Starling’s valuation was also cut by Chrysalis while the valuations of its listed peers also fell, Chrysalis said.

Chrysalis invested £10m in Starling’s latest £130.5m funding round.

As for remittance fintech Wise, it said shares had fallen 40 percent to the end of June, but since then Wise’s share price has fallen, driven by a strong trading update.

Richard Watts and Nick Williamson (co-portfolio managers) said: “We are encouraged that our NAV performance was in line with the 23% NASDAQ decline in Q2, particularly as our second largest holding, which represented 19 per cent of the portfolio at the start of the period , was marked by almost 80 percent.

“The implied write-down for the remainder of the portfolio is approximately 8 percent, reflecting strong trading, a positive funding round for Wefox and the inherent downside protection we have structured into many of our investments.

“The equity markets have recovered strongly since 30 June, and we note the very strong performance of some of the listed competitors against which we compare our portfolio assets.

“This has already been reflected in one of our portfolio assets raising primary capital at a premium to the previous funding round and should lead to future NAV progression if these recent gains are sustained.”

“With over £48m of cash and £57m of listed assets, which together represent 20.4 per cent of market capitalization, Chrysalis is in a very strong position heading into H2 and we remain confident in the future potential of this portfolio and the prospects of company.”