Investment trust insider on growth capital funds – James Carthew: Growth capital funds like Chrysalis are bargains
Last week, Federal Reserve chair Jerome Powell poured more cold water on the prospect of imminent interest rate cuts in the US but at least seemed to rule out new rate rises. Growth capital funds providing finance to early-stage businesses were hit hard when rates started to climb in 2022 and, for many, the only direction for net asset values (NAVs) and share prices seems to be down.
I have been hopeful that rate cuts would be the catalyst for a rerating of these funds but while we will have to wait for that, more recently there has been some better news for investors.
Chrysalis (CHRY), for example, just reported a decent 3% uplift in its quarterly valuation, extending a rally that started about a year ago. At around 81p, its share price is also well off the 53p low it hit in March 2023 and again in October 2023. However, the recovery still has a long way to go, with the shares now trading on a 45% discount.
The latest increase was driven by uplifts in the valuations of Starling, Smart Pension and Klarna and was offset by a reduction in the valuation of Chrysalis’ insurance investment Wefox, part of which relates to falling prices for listed comparators.
Starling’s banking activities are consistently profitable now and… read more here