Chrysalis Investments EGM 2024

The business of the EGM will be to consider and, if thought fit, approve a related party transaction. As previously announced, the Company has entered into new arrangements relating to the management of the Company. In summary, with effect from 1 April 2024:

–      the appointment of Jupiter Investment Management Limited (“JIML”) as portfolio manager and investment adviser to the Company will be terminated; and

–      pursuant to a new investment management and advisory agreement which becomes effective 1 April 2024 (the “Investment Management and Advisory Agreement”):

o  the Company has appointed Chrysalis Investment Partners LLP (the “New Investment Adviser”) to act as the Company’s investment adviser; and

o  G10 Capital Limited – part of IQ-EQ group’s UK Regulatory and AIFM platform – has been appointed as the Company’s alternative investment fund manager (the “AIFM”).

The EGM Circular sets out details of the Company’s new management arrangements and, specifically, seeks shareholder approval for the implementation of the performance fee terms and vesting conditions of the performance fee payable to the New Investment Adviser (the “Performance Fee Terms”) contained in the Investment Management and Advisory Agreement (the “Related Party Transaction”). The Company considers that the implementation of the Performance Fee Terms constitutes a related party transaction within the meaning of the Listing Rules on the basis that the potential benefit of the Performance Fee Terms to the Principals as related parties is not quantifiable. As a result, the implementation of the proposed Performance Fee Terms described in the EGM Circular requires the approval of the Shareholders.

The Board strongly urges shareholders to review the contents of the Circulars in their entirety and consider the Board’s recommendation to vote in favour of the respective resolutions. For the reasons set out below, the Board is unanimous in believing that the Related Party Transaction is in the best interests of the Company and its Shareholders as a whole:

1.   as compared to the performance fee arrangements previously in place, the Related Party Transaction will result in a reduction in the overall performance fee level that is potentially payable by the Company to the New Investment Adviser in respect of any single financial year (or other calculation period) of the Company (from 20% to 12.5%);

2.   as compared to the previous performance fee arrangements, the Related Party Transaction will introduce a cap (of 2.75%) as to the level of performance fees paid in any single financial year (or other calculation period) of the Company;

3.   the Related Party Transaction will introduce a primarily share-based performance fee, creating greater alignment between the New Investment Adviser’s management team and Shareholders;

4.   75 per cent. of any performance fee in respect of a particular financial year of the Company will be deferred and its payment subject to certain conditions based on the long-term performance of the Company, ensuring that the New Investment Adviser’s management team is incentivised to generate long-term value creation; and

5.   the high water mark will be retained at the same level as the equivalent provision in the Company’s prior arrangements, meaning that no performance fee will become payable unless the previous high water mark (being 251.96 pence) is reached.