Beleaguered investment company Chrysalis will break free from Jupiter Asset Management, following the board’s concerns around “the provision of sufficient dedicated resources for the management team”.
As part of the move, the company – which is currently trading on a 49.6% discount to net asset value – will take co-managers Richard Watts and Nick Williamson (pictured) with it, who will enter into a tripartite contract with them serving as a new independent investment adviser from 1 April next year. According to the board, the changes will allow the investment managers to “be solely focused… on the company’s portfolio”.
The move comes following a shareholder consultation earlier this month ahead of the company’s annual general meeting in Q1 next year. Conducted by Rothschild, it covered some 60% of issued shares independent from Jupiter.
Chrysalis’s board stated: “Such a move is consistent with feedback from the recent shareholder consultation that demonstrated strong support for the managers and their efforts in creating and running Chrysalis, a view which the board shares.
“While the current NAV per share remains materially below its peak, recent events hopefully point to a more optimistic outlook, with yields generally softening and company specific news – such as discussion around Klarna’s move towards IPO – also providing a more upbeat prognosis.
“Given the managers’ in-depth knowledge of the company’s portfolio, the board is of the view that they are best placed to oversee the next stage of Chrysalis’ growth.”
Private equity-focused Chrysalis was originally managed by Merian Global Investors, which was acquired by Jupiter in 2020. Since then, however, the board said there have been “some outstanding issues… which could affect the potential development of Chrysalis”. Alongside resourcing issues for the managers, the board also had concerns regarding “the reduction of various Jupiter-managed holdings in Chrysalis”.
“After considering all the implications of a potential change in manager, including the payment of a substantial termination fee, the board’s unanimous conclusion was that it wished the Company to continue to be run by the existing investment team,” it said.
The move will see Jupiter reduce its management fee from 50 basis points to 15 basis points, which will save Chrysalis shareholders approximately £1.4m to the end of March next year, according to the board. G10 Capital Limited will take over AIFM services for the trust.
Future performance fee arrangements will be subject to shareholder approval at a meeting immediately after the trust’s AGM, according to the board. The new investment adviser will have a 12-month minimum initial term, then will be made terminable on 6 months’ notice afterwards.
A further announcement will be made when the agreement is finalised.
