Chrysalis Investments realises 25% premium for Graphcore sale

Chrysalis Investments (CHRY) announced that portfolio company, Graphcore, has been acquired by Softbank. Chrysalis expects to receive cash proceeds of approximately $56.0 million; the company’s position in the capital structure of this investment led to a significantly better outcome than otherwise might have been the case. The expected pounds sterling proceeds of £43.8 million (assuming the gross proceeds are applied for valuation purposes) represent a 25% premium (equating to circa 1.46 pence per share) to the company’s current carrying value of Graphcore of £35.1 million, as of 31 March 2024. The Investment Adviser has been clear that this was one of the riskier positions in the portfolio: one that offered a play on the rise of the, at the time, nascent AI market, but where the downside protection of the company’s position in the capital structure offered a way of defraying that risk.

Nick Williamson and Richard Watts (managing partners of the investment adviser) comment:

“With the sale of Graphcore, the company will have met the cash reserve required to fulfil the first part of the CAP; any further realisations should trigger the second part of the CAP, namely the return of £100 million to shareholders.”

Nick and Richard add that while the Graphcore investment thesis did not play out as originally envisaged, the knowledge the company built in this space was valuable and this has been recognised by SoftBank. As such, they congratulate Nigel Toon and his team on effecting this exit. 

CHRY : Chrysalis Investments realises 25% premium for Graphcore sale