Chrysalis Investments could suffer a further knock to its net asset value following reports that Klarna is mulling a 67% haircut to its valuation.
The Swedish ‘buy now pay later’ firm had been looking to raise $1bn from investors, according to reports in May, in a deal that would value the business at $30bn.
However, less than a month later, the Wall Street Journal reports it plans to scale back its ambitions and is now considering raising just $500m, putting its price tag at $15bn.
Klarna became Europe’s most valuable fintech start-up last summer when its last funding round valued the business at $45.6bn. But, like other listed counterparts in the tech sector, it has seen its fortunes reverse as rising inflation and interest rates and the looming fear of recession cause investors to be wary of ‘growth’ companies.
In Q1, Klarna saw net losses quadruple to SEK 2.6bn (£210m), prompting the company to lay off 10% of its workforce.
Klarna hit a bellwether for current pressure on tech valuations
A significant drop in Klarna’s valuation would spell more bad news for Chrysalis, which has already seen several of its major holdings written down this year.
The fintech firm accounted for 19% of NAV based on a valuation of $30bn. Applying a revised $15bn valuation would result in a 9.5% hit to the trust’s NAV, according to Jefferies.
It now estimates NAV will come in at 188.5p, down from 211.8p at the end of March, leaving shares trading at a 43.5% discount.
“The extent and speed of the apparent valuation decline here offers an effective bellwether for the current pressure on tech valuations amid a ‘dash for cash’,” analyst Matthew Hose said.
Numis estimates the Klarna hit will bring down Chrysalis’ NAV to 192p. Chrysalis’ downward slump is not a unique phenomenon, the stockbroker noted, with other investment companies that have exposure to fast-growing tech businesses, such as Scottish Mortgage and BlackRock Throgmorton, also nursing extensive losses this year.
“Calling the bottom is impossible, however Chrysalis’ current share price appears to be factoring in a significant amount of bad news at a c.44% discount after a halving of its second largest holding,” Numis said.
“Furthermore, the fund had c.£62m cash at 31 March, with further c.£40m in listed holdings adjusting for share price moves since.”
Share price total return ytd
| Molten Ventures (formerly Draper Esprit) | -56.8% |
| Chrysalis Investments | -56.5% |
| Baillie Gifford US Growth | -52% |
| Scottish Mortgage | -49.7% |
| Schiehallion | 47% |
| Blackrock Throgmorton | 45% |
| Allianz Technology | 43.3% |
| Seraphim Space | 43% |
See also: Chrysalis swaps to independent valuation committee
