Wefox valuation miss adds to Chrysalis woes

Just a day after the value of ‘buy now pay later’ juggernaut Klarna took a massive hit

Fox in snow

Shares in Chrysalis dropped a further 4.5% by midday today on news that the latest fund raising round by insurtech holding Wefox saw its valuation fall short of expectations.

It brings further pain to investors who had to suffer the news on Monday that former darling Klarna took an eye-watering 86% valuation haircut.

Wefox was valued at $3bn this time last year. Its latest funding round, which pulled in $400m, bumped that up to $4.5bn.

But, while the 50% increase in value is a vast improvement on the stomach-churning drop experienced by Klarna only the day before, expectations last month had been for it to achieve between $5bn-$6bn, according to Bloomberg.

See also: Chrysalis suffers 13% hit to NAV

Eyes on Asia and the UK

The equity fund raising was led by Mubadala Investment Company with participation by LGT, Horizons Ventures and Omers Ventures. There was also a debt element to the funding.

The money will be used to develop products and expand Berlin-based Wefox across Europe and, further down the line, into Asia and the US.

Chrysalis did not participate in the fund round, stating afterwards that “the achieved valuation underpins the current carrying value of the asset”.

Wefox is the second largest holding in the portfolio, representing 13.3% – second only to Starling Bank (25.1%) and ahead of Smart Pension (10.6%).

See also: Chrysalis puts a pin in share buybacks as discount slumps to 55%

‘More than sufficient liquidity’

Co-portfolio manager Richard Watts said: “Wefox has been one of our strongest performing assets in recent years and this has been reflected by a successful funding round in a tough environment.

“Three of our largest assets have raised a total of $1.4bn in recent weeks, with participation from some of the world’s leading investors, and this highlights the continues confidence investors have in our assets.”

He continued: “The impact of this funding round has further improved the financial position of the portfolio, in addition to Klarna’s $800m funding round.

“Two thirds of our portfolio is now either profitable or has the required level of capital to reach profitability and Chrysalis has more than sufficient liquidity to support the remaining portfolio assets, where necessary.”

As of 11 July, Chrysalis had roughly £51m in cash and has “significant further liquidity available, most notably its holdings in listed assets, which currently total approximately £64m”, the company said.

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