Chrysalis marks down Starling stake again and reduces Klarna holding
Chrysalis Investments has slashed the price tag of its Starling stake for the second straight quarter.
The British investment trust marked down the value of its holding in the digital bank by five per cent to £356m in the second quarter. This helped contribute to an overall drop of 2.35p per share in Chrysalis’ net asset value.
The UK fintech makes up just over 56 per cent of the firm’s total portfolio value, making it its largest asset by a margin of over 30 per cent.
Chrysalis said the main driver behind the write-down was a decline in valuation multiples among the “upper quartile” of its peer set, which tracks high-growth fintechs and digital banks.
Traditional UK bank stocks rallied 12.5 per cent over the period and the broad peer group rose 6.5 per cent but valuations for the top-tier fintechs contracted, which pulled down Starling’s paper valuation.
Investors have ditched their exposure to high-growth stocks over the last few months, opting for the safe-haven equities amidst the market volatility triggered by the conflict in the Middle East.
It confirmed the second consecutive mark down for Starling after Chrysalis wrote down its stake by 14 per cent earlier this year to £374.7m.
In February, City PM revealed Starling founder Anne Boden had cut her stake in the fintech during a secondary share sale.
Chrysalis sells off part of Klarna stake to clear debt
The trust said Starling’s profit growth had “exceeded expectations” and it remained “excited regarding the forecast trajectory,” which it added would become “the key determinant of future valuation”.
Starling recorded a £217m pre-tax profit in the last year, down from £223m, after revenue slipped on falling interest rates and the digital bank ploughed investment into its software-as-a-service arm.
Chrysalis confirmed it had sold off part of its Klarna stake, which makes up just short of a tenth of its portfolio, in a bid to raise cash and clear company debt.
The firm said it offloaded £6.6m worth of stock at roughly $17.73 per share during the quarter followed by another $8m post-quarter end.
Chrysalis said it would use the proceeds to pay off its £17.8m in outstanding debt.
As of 30 June, the trust holds a £57m stake in Klarna. It followed a 54 per cent mark down of its holdings to £41m at the end of March following the Swedish fintech unicorn’s bruising IPO last September.
Shares in the buy now, pay later pioneer are down over 55 per cent to $18.94 since its debut.