Chrysalis’ decision to swap to an independent valuation committee has been described as a “sensible move” that will be “good for market perception”, as it looks to put backlash over its performance fee behind it.
The board of the £1.2bn trust has appointed four members to the committee, which will be chaired by KPMG veteran Lord Rockley, in preparation for its move to becoming a self-managed trust on 21 July.
Chrysalis announced it would be bringing its valuation and risk management in-house in its annual results, replacing the existing alternative investment fund manager Jupiter Unit Trust Managers.
The same report revealed managers Nick Williamson and Richard Watts (pictured) had raked in an unprecedented £112m in performance fees after the trust’s NAV shot up 57% in the year ended 30 September 2021.
The eye-popping performance fee prompted an industry backlash, with several analysts flagging the year-long time period used to calculate the fees as controversial.
More recently, Chrysalis published an unaudited NAV, which showed the value of its portfolio had dropped 13% between December 2021 and March 2022. An independent third party was brought in to value six assets, representing 67% of gross portfolio value, due to the wild market swings sparked by Russia’s invasion of Ukraine.
See also: Eyewatering Chrysalis performance fee throws investment trust charges in the spotlight
Good for market perception
Numis viewed the move as “a positive step” for Chrysalis that will “improve the efficiency and timeliness of the valuation process”.
“While we do not believe there were previously any serious concerns around the valuation process, it will be good for market perception regarding independence, in our view, particularly given the credentials of the committee members, which appear extremely strong,” it said.
Alongside Rockley, the independent valuation committee line-up consists of Diane Seymour Williams, a 30-year vet of the asset management and wealth management industry and ex-Deutsche Morgan Grenfell portfolio manager; Jonathan Biggs, former COO of venture capital Accel’s European arm; and Tim Cruttenden, who has been a director at Chrysalis since its formation.
‘Prudent valuation process is imperative’
Liberum also hailed the decision to assemble an independent valuation committee made up of experienced industry figures as a “sensible move” by Chrysalis.
“A prudent valuation process is imperative, particularly in volatile markets and given the movements experienced by public growth markets,” it said in an analyst note.
“The shares currently trade on a 38% discount to NAV, largely reflecting negative sentiment for growth capital. Despite potential for near-term volatility, the underlying performance of the portfolio companies remains strong (80% LTM revenue growth) and this should be the key driver for the shares over the medium term.”