Propose New Inv Policy New Mgmt Arr. Notice of EGM
Summary by AI BETAClose X
The information contained in this announcement is restricted and is not for publication, release or distribution in the United States of America, any member state of the European Economic Area (other than to professional investors in Belgium, Denmark, the Republic of Ireland, Luxembourg, the Netherlands, Norway and Sweden), Canada, Australia, Japan or the Republic of South Africa.
The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulation (EU) No. 596/2014 which forms part of domestic law in the United Kingdom pursuant to The European Union Withdrawal Act 2018, as amended by The Market Abuse (Amendment) (EU Exit) Regulations 2019.
20 February 2026
Chrysalis Investments Limited ("Chrysalis" or the "Company")
Proposed New Investment Policy, New Management Arrangements and Notice of EGM
Extraordinary General Meeting
In December 2025, the Board announced its intention to propose a new investment policy, together with certain other interrelated matters that would enable an orderly realisation of the Company's assets to occur over the next three years.
The Company now announces that, further to its previous announcements, an extraordinary general meeting ("Extraordinary General Meeting" or "EGM")) will be held at 1.00 p.m. on 24 March 2026 to consider the proposals in connection with the proposed new strategy of the Company as announced on 19 December 2025 (the "New Strategy").
The circular which includes the notice of the EGM (the "EGM Circular) will be published shortly.
The business of the EGM will be to consider and, if thought fit, approve a revised investment policy (the "New Investment Policy") and changes to the Company's articles of incorporation (the "New Articles"), each in connection with the proposed New Strategy.
The EGM Circular also sets out details of the Company's proposed new management arrangements in connection with the implementation of the New Strategy, as set out below.
Rationale for New Investment Policy
In 2024, the Board had set out a series of measures which it anticipated would help to address the following issues:
The wide share price discount to NAV:
The Company has returned over £100m of capital through share buybacks over the last two years in line with the Capital Allocation Policy ("CAP") adopted in March 2024. Whilst the discount to NAV has improved, it has not improved significantly. The Board believes that this persistent level of discount is a market driven issue but is also, in part, because of the perceived risk of reinvestment in the Chrysalis strategy.
Investment performance:
The Company had a portfolio of 12 growth company investments in March 2024. It was hoped that, by extending the life of the Company by a further three years, these growth companies would have the chance to develop and their value could be maximised.
This is still the case for Starling and Smart Pension, which have both increased in value and hold potential for further growth. However, the remaining four investments have not progressed as hoped.
Since inception, the Company has raised £818.3m of external capital (net of issue costs). As at Q1 2026, the Company had returned approximately £108m to shareholders through share buybacks and reported a net asset value of £818.5m, implying total value of approximately £926.5m. This represents a 1.13x total value to paid in capital (TVPI) multiple over approximately seven years.
Overall, the blended subscription price across the shares issued for cash since inception is approximately £1.45 per share. The Company's current share price of £0.95 represents a discount of approximately 34% to that blended subscription price.
Based on this historic performance, the Board believes returning capital to shareholders on realisations is more appropriate than reinvesting in new investments.
Management arrangements would lead to improved resource and capability:
At the time of introducing the capital allocation policy, the Board also entered into a new investment management and advisory agreement with Chrysalis Investment Partners LLP ("CIP", the "Investment Adviser" or the "IA"), a vehicle formed by Richard Watts and Nick Williamson, and G10 Capital Limited as the alternative investment fund manager.
It was hoped that, by enabling a spin-out of the IA, CIP would be well positioned and funded to build out its own regulatory and operational capacity as communicated at the time. In the Board's view, the IA has not developed its regulatory and operational capacity as envisaged over this period.
Consequently, the Board believes that a revised investment policy which does not provide for any new investments is appropriate. The proposed New Investment Policy is as follows:
"Investment objective
The Company's objective will be to maximise the value of its existing portfolio over a three-year period (from February 2026) and to make capital returns to Shareholders upon realisation of investments.
Investment policy
The Company's investment policy is to effect an orderly realisation of its assets in a manner that is consistent with the Company's investment objective and the principles of good investment management. This process is expected to include sales of some or all of the Company's assets which may include running off certain assets in accordance with their timelines for a natural exit. Once the Company has completed the disposal of its assets, it is intended that the Company will be put into a voluntary liquidation process.
The Company will cease to make any new investments or to undertake any capital expenditure except:
(i) with the prior written approval of the Board and where, in the opinion of the Board, in its absolute discretion, the investment or capital expenditure is considered necessary or desirable to protect or enhance the value of any existing investment or to facilitate an orderly disposal; or
(ii) where the investment or capital expenditure is required under contract or applicable law or regulation by the Company or any vehicle through which it holds its investments),
any such investment or capital expenditure being a "Permitted Investment".
In normal market conditions, the Company's level of gearing is not expected to exceed 20 per cent. of the Company's net asset value (calculated at the time of drawdown) but it is intended that the Company's existing debt facility will be repaid in full at its maturity (expected to be in September 2026). For the avoidance of doubt, the Company will not take on any new borrowings.
Subject to prior repayment of all amounts owed under the Company's borrowing facilities from time to time, the net proceeds received from the sales of assets will be returned to shareholders in an efficient and timely manner, as the Board considers appropriate, which may include compulsory redemptions, tender offers or share buybacks, subject to the maintenance of a working capital buffer to cover the forecast running costs of the Company and an appropriate provision for investments under i) and ii) above.
The level of such buffer will be kept under regular review by the Board. It is the Board's intention that as investments are sold and the likelihood for follow on investing reduces, the provision for follow on investing will reduce.
The Company will seek to dispose of listed securities received through IPO, or make asset disposals, in a manner and timeframe considered to balance the objective of maximising value and returning capital to shareholders, having regard to market conditions.
Subject to the ability of the Company to make Permitted Investments, any cash received by the Company that has not been used to repay borrowings prior to its distribution to the Company's shareholders will be held by the Company as cash on deposit and/or as cash equivalent securities, including short-dated corporate bonds or other cash equivalents, money market funds, cash funds or bank cash deposits (and/or funds holding such investments).
The Company may use derivatives for efficient portfolio management and managing any exposure to assets denominated in currencies other than pound sterling.
Changes to Investment Policy
Any material change to the Company's investment policy set out above will require the approval of Shareholders by way of an ordinary resolution at a general meeting and the approval of the Financial Conduct Authority. Non-material changes to the investment policy may be approved by the Board."
Management/advisory arrangements
In light of the proposed changes to the Company's investment policy, the Board has evaluated options available to the Company in relation to its management and advisory arrangements. These have included continuing to be advised by CIP on terms appropriate to the New Investment Policy, being advised by a new investment adviser and the adoption of a self-managed model.
The annual investment advisory fee, currently approximately £4.5 million under the existing investment advisory arrangement with CIP, was put in place three years ago to support the development of CIP as an independent entity with the required resources, structure and processes to manage a multi-asset growth portfolio which was continuing to assess and make new investments. Given the New Investment Policy does not envisage new investments and is focused on realising assets in an orderly manner, the Board has sought to secure changes to the investment management and advisory agreement which more appropriately reflect the New Investment Policy. At the time of this announcement, the Board's proposals for a new investment management and advisory agreement have not been agreed to by CIP.
As a result, taking into account the costs to shareholders of the existing investment advisory arrangements, the number of holdings in the Company's portfolio and the expertise available through the Board and third party consultants (as appropriate) the Board has determined that it would be in the best interests of shareholders to terminate the existing arrangements with CIP and the Board has today served protective notice on CIP under the Company's investment management and advisory agreement (which has a six months' notice period). For the avoidance of doubt, notice has not been served on G10 Capital Limited, who will remain as the Company's AIFM for at least that six-month notice period.
Unless other arrangements can be reached with the Investment Adviser during its six month notice period, the Company's intention after the expiry of that notice period is to operate with a self-managed model in delivering the New Investment Policy, continuing to exercise appropriate oversight of its portfolio companies, including the maintenance of governance and information rights. In connection with this proposed transition, the Board has been working with Sam Dobbyn who has today joined the Board as an independent non-executive director.
Sam Dobbyn, who has significant relevant experience most recently at Allied Minds PLC, will oversee the transition, ensuring continuity of portfolio oversight, and acting as the central point of accountability between the Board, the Investment Adviser, and the Company's other advisers. Following the transition, the Board intends that Sam will lead the execution of the Company's business plan in respect of key portfolio assets, supported by other Board members and by external advisers as required.
Portfolio oversight, risk management, valuation oversight, regulatory compliance and financial reporting would continue to be supported by IQEQ/G10 (initially as AIFM as referenced above, and then - should the Company complete its transition to a self-managed model - in a non-AIFM advisory capacity), alongside specialist legal and transaction advisers engaged on a case by case basis. IQEQ/G10 have offered to provide their services to the Board on the revised approach where they will provide the same risk management and reporting services on a fixed fee basis. The Board will continue to discuss with the IA how it could work within this structure on a mutually acceptable basis. Given the IA has already received a performance fee, the Board does not believe a further incentive fee for the IA is appropriate but hopefully other terms can be agreed.
The Board believes that this approach provides appropriate risk control, expertise, transparency and flexibility while materially reducing the Company's ongoing cost base. Based on current planning assumptions, the annual operating cost of the self-managed structure is expected to be materially lower than the current investment advisory arrangements and is anticipated to be below £2 million per annum. The Board will retain full oversight of strategy and disposal decisions and will provide further updates to shareholders as the transition progresses.
New Articles
In connection with the proposed adoption of the New Investment Policy, the Board is proposing the adoption of the New Articles. The material changes proposed to be made to the Existing Articles by the adoption of the New Articles are as follows:
· a change to the date of the Company's next continuation vote, such that the next continuation vote will be held in February 2029. The purpose of this amendment is to allow for the expected three-year period of the Company's strategy to return capital to run its course and avoid a continuation vote (which would otherwise be held in early 2027) unduly affecting the execution of the proposed New Investment Policy; and
· the removal of the condition to the Directors' authority to compulsorily redeem Shares in accordance with the Existing Articles that a continuation vote is not passed (the "Continuation Vote Condition"). This will allow the Directors flexibility to use the compulsory redemption mechanism provided for in the Existing Articles (and the New Articles) at any time to return capital in accordance with the New Investment Policy where the Directors deem it to be in the interests of Shareholders to do so. Other minor amendments have been made to the process for such compulsory redemptions to be made.
UK Resident Shareholders - UK Offshore Fund Rules
If the Proposals are approved by Shareholders, it is expected that this will result in the Ordinary Shares being treated as an "offshore fund" for the purposes of UK taxation.
As a result, the Directors intend to obtain from HM Revenue & Customs ("HMRC") recognition of the Company's Ordinary Shares as a reporting fund for the purposes of the UK Offshore Funds (Tax) Regulations 2009 (SI 2009/3001) (the "UK Offshore Fund Rules"). Details of the date from which such status applies may be found on the website of HM Revenue & Customs at http://www.gov.uk/government/publications/offshore-funds-list-of-reporting-funds. There can be no guarantee that reporting fund status will be obtained and/or maintained for the Shares.
Further information on the UK Offshore Fund Rules and its implications for Shareholders are set out in the EGM Circular.
Expected timetable
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Latest time and date for receipt of Form of Proxy (and any accompanying power of attorney) for the EGM |
1.00 p.m. on 20 March 2026 |
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EGM |
1.00 p.m. on 24 March 2026 |
Defined terms used and not otherwise defined in this announcement shall have the same meaning as in the EGM Circular.
-ENDS-
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For further information, please contact:
Media Montfort Communications: Charlotte McMullen / Imogen Saunders
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+44 (0) 7826 547 304 chrysalis@montfort.london |
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Investment Adviser Chrysalis Investment Partners LLP: James Simpson
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+44 (0) 20 7871 5343 |
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AIFM G10 Capital Limited: Maria Baldwin
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+44 (0) 20 7397 5450 |
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Deutsche Numis: Nathan Brown / Matt Goss
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+44 (0) 20 7260 1000 |
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Panmure Liberum: Chris Clarke / Darren Vickers
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+44 (0) 20 3100 2222 |
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Barclays Bank PLC: Dion Di Miceli / Stuart Muress / James Atkinson
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+44 (0) 20 7623 2323
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Rothschild & Co: |
+44 (0) 20 7280 5000 |
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Alice Squires / Tim Brenton / Ahmed Jibril
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|
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IQEQ Fund Services (Guernsey) Limited: Aimee Gontier / Elaine Smeja
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+44 (0) 1481 231 852 |
A copy of this announcement and the EGM Circular will shortly be available on the Company's website at https://www.chrysalisinvestments.co.uk and submitted to the National Storage Mechanism (NSM) where they will be available for inspection at https://data.fca.org.uk/#/nsm/nationalstoragemechanism. In addition, the EGM Circular will be available to view at the registered office of the Company, during normal business hours on weekdays (Saturdays, Sundays and public holidays excepted) from the date of this document until the conclusion of the EGM.
This announcement is for information purposes only and is not an offer to invest. All investments are subject to risk. Past performance is no guarantee of future returns. Prospective investors are advised to seek expert legal, financial, tax and other professional advice before making any investment decision. The value of investments may fluctuate. Results achieved in the past are no guarantee of future results. Neither the content of the Company's website, nor the content on any website accessible from hyperlinks on its website for any other website, is incorporated into, or forms part of, this announcement nor, unless previously published by means of a recognised information service, should any such content be relied upon in reaching a decision as to whether or not to acquire, continue to hold, or dispose of, securities in the Company.
This announcement includes statements that are, or may be deemed to be, "forward-looking statements". These forward-looking statements can be identified by the use of forward-looking terminology, including the terms "believes", "estimates", "anticipates", "expects", "intends", "may", "will", or "should" or, in each case, their negative or other variations or comparable terminology. These forward-looking statements relate to matters that are not historical facts regarding the Company's investment strategy, financing strategies, investment performance, results of operations, financial condition, prospects and dividend policies of the Company and the instruments in which it will invest. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. Forward-looking statements are not guarantees of future performance. There are a number of factors that could cause actual results and developments to differ materially from those expressed or implied by these forward-looking statements. These factors include, but are not limited to, changes in general market conditions, legislative or regulatory changes, changes in taxation regimes or development planning regimes, the Company's ability to invest its cash in suitable investments on a timely basis and the availability and cost of capital for future investments. The Company expressly disclaims any obligation or undertaking to update or revise any forward-looking statements contained herein to reflect actual results or any change in the assumptions, conditions or circumstances on which any such statements are based unless required to do so by FSMA, the UK Listing Rules, the Prospectus Regulation Rules made under Part VI of the FSMA or the Financial Conduct Authority or other applicable laws, regulations or rules.
The Company is an alternative investment fund ("AIF") for the purposes of the AIFM Directive and as such is required to have an investment manager which is duly authorised to undertake the role of an alternative investment fund manager ("AIFM"). G10 Capital Limited is the AIFM to the Company. Chrysalis Investment Partners LLP is the investment adviser to G10 Capital Limited. Chrysalis Investment Partners LLP (FRN: 1009684) is an Appointed Representative of G10 Capital (FRN: 648953) Limited, which is authorised and regulated by the Financial Conduct Authority.
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