Jupiter to sell Starling stake but Chrysalis holds on

The challenger bank is eyeing an IPO before the end of 2023

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Jupiter Fund Management is looking to sell its stake in Starling Bank, which is thought to be worth in excess of £200m.

The story was broken by Sky News, which reported that the FTSE 250 fund manager has instructed Citi to find a buyer for its nearly 10% equity stake in Starling.

Jupiter and Starling Bank declined to comment when contacted by Portfolio Adviser.

In 2021, CEO and founder Anne Boden put a one-to-two-year time frame on a Starling Bank IPO. However, that was before market conditions soured and listing activity all but dried up this year. Its latest fund raise took place in April, netting the bank £130.5m and putting a £2.5bn price tag on it. All existing investors took part.

Starling is held across several Jupiter strategies, including its £1.7bn UK Mid Cap Fund run by Richard Watts. Per its latest factsheet, the challenger bank is its biggest holding, accounting for 7.6% of the portfolio.

It is also the fourth biggest holding of Jupiter’s £844.7m UK Smaller Companies Fund and the second largest stake in its £137.9m UK Smaller Companies Focus Fund.

One strategy understood to be bucking the trend is Chrysalis Investments, which is expected to retain its nearly 10% stake. The trust has been a long-term supporter of Starling, which accounts for 20% of its portfolio.

Portfolio Adviser reached out to Chrysalis, but no response was received ahead of publication.

The news follows a particularly challenging period for Jupiter. Year-to-date, the FTSE 250 fund manager’s share price is down 61% at £1.02.

Chief executive Andrew Formica (pictured) is set to step down on 1 October after just three years at the company. His tenure oversaw the oft-questioned acquisition of Merian and, more recently, an eye-watering £60m fee paid to Chrysalis managers Nick Williamson and Richard Watts.

The investment trust has had an especially rough run recently, having put a pin in its share buyback plans after its discount widened to 55% in July. The same month saw a sharp revaluation of another of its holdings, Klarna, and a valuation miss by Wefox.

August hasn’t seen much improvement with Chrysalis’ NAV taking yet another hit after one of its newer holdings, Revolution Beauty, warned it may have to suspend trading. Year-to-date, the trust’s share price is down nearly 70% at £0.76.

In light of these challenges, it is understandable why Williamson and Watts might want to hang on to one of Chrysalis’ more bankable names.

See also: Andrew Formica: Merian acquisition has made Jupiter stronger

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