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Chrysalis planning capital allocation and performance fee changes

13th Oct 2023 11:30

(Alliance News) - Chrysalis Investments Ltd on Friday announced proposals for a new capital allocation policy and changes to its performance fee arrangements, to better align the interests of its portfolio manager and shareholders.

Shares in Chrysalis were up 6.5% at 58.77 pence in London on Friday.

The London-based trust, which invests in technology and finance startups, said the proposed capital allocation policy sets out a framework for more disciplined use of its capital. Consequently, Chrysalis "will aim at all times to maintain a prudent cash reserve" with current guidance around GBP50 million.

Chrysalis said once that requirement is satisfied, it will prioritise distributions to its shareholders and currently intends to repurchase up to 15% of its share capital. It may then seek authority to continue buybacks until GBP100 million has been returned.

Finally, Chrysalis aim to distribute up to 25% of net cash profits on realisations to shareholders, in order to "balance its capital allocation between further distributions...and portfolio investments".

Chrysalis also said the company and its portfolio manager, Jupiter Investment Management Ltd, have agreed changes to the existing performance fee. These include reducing the overall performance fee level respecting any single financial period to 12.5% from its current 20% level.

The agreement also will cap the level of performance fees paid in any single financial period to 2.75% of Chrysalis's audited net asset value, and make the performance fee primarily share-based.

Chrysalis said its board unanimously believes that these changes are in the best interests of the trust and its shareholders.

Chrysalis intends to commence a consultation with shareholders regarding the proposed policies ahead of its 2024 annual general meeting, which it plans to hold on or before April 30.

"In deriving the proposed capital allocation policy, the board has sought to balance its recognition of the compelling opportunity to buy back the company's shares at what we believe is an attractive discount," said Chair Andrew Haining, "with our intent to drive long-term returns by providing disciplined support for the current portfolio companies and potentially by allocating to new opportunities in the future."

He continued: "Both the board and the portfolio manager are excited about the current prospects for the portfolio and remain confident in the Chrysalis investment strategy, which backs high growth, innovative businesses which are leading transformation within their sectors."

By Emma Curzon, Alliance News reporter

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