Chrysalis Investments NAV Slumps 22% as Starling, Klarna and wefox Write-Downs Bite

Chrysalis Investments interim results: 22% NAV fall shows how brutal private market re-ratings can be

Chrysalis Investments has reported a tough first half, with net asset value (NAV) per share falling to 133.94p from 171.65p at 30 September 2025 – a drop of 22.0%.

For retail investors, NAV is simply the estimated value of the underlying portfolio minus liabilities, divided by the number of shares. When that falls this sharply, it usually means the market thinks the investments are worth a lot less than they were a few months earlier.

And that is exactly the story here. The big damage came from write-downs in Starling, Klarna and wefox, which together accounted for 32.3p of the 37.7p fall in NAV per share over the period.

Chrysalis Investments key numbers: NAV, share price, discount and liquidity

Metric	31 March 2026	30 September 2025	Change
NAV per share	133.94p	171.65p	-22.0%
Share price	81.40p	121.20p	-32.8%
Total net assets	£647 million	£875 million	-26.1%
Total liquidity	£72.7 million	Not disclosed in this summary table	–
Share buybacks in period	26,625,733 shares	–	Approximate cost £29.3 million

The share price fall was even worse than the NAV fall, leaving the shares at an approximate 39% discount to NAV at 31 March 2026. By 26 June 2026, the Board said that discount had widened to 44%.

That matters because the market is effectively saying it does not fully trust the stated value of the portfolio, or at least does not believe that value will be realised quickly and cleanly.

Why Chrysalis NAV fell: Starling, Klarna and wefox did most of the damage

Starling valuation fell despite solid trading momentum

Starling remains the giant in the room. It was worth £374.7 million at 31 March 2026 and made up 57.9% of net assets.

Its carrying value fell by 6.6p per Chrysalis share in the period. Importantly, the company says this was mainly driven by weaker comparable listed peers rather than poor operational performance.

That looks credible on the numbers provided. Starling delivered a fifth consecutive year of profitability, reporting pre-tax profit of £217.1 million on revenue of £887.4 million, while customer accounts rose to 6.2 million.

My take: operationally, Starling still looks like the crown jewel. But when one holding is nearly three-fifths of NAV, any valuation wobble hits Chrysalis shareholders like a sledgehammer.

Klarna was hit by public market reality

Klarna was the nastiest mark-to-market move. Its value fell by 15.0p per Chrysalis share over the six months, with the share price dropping 63% in the period.

This is a useful reminder that once a private company lists, the market stops being polite. Klarna closed at $13.09 on 31 March 2026, down sharply from $36.65 at 30 September 2025.

Yet the operating update was not bad at all. In the first quarter of 2026, Klarna reported gross merchandise volume of $33.7 billion, up 33% year-on-year, revenue of $1,012 million, up 44%, and its first quarter of positive net income.

That is the frustrating bit for Chrysalis holders. The business appears to be improving, but the listed share price has still been hammered.

wefox remains the messy one

wefox knocked 10.8p off NAV per share and ended the period valued at £39.8 million, or 6.2% of net assets. The group did achieve its first full year of profitability in 2025, which is a positive milestone.

But the capital structure is clearly complicated, and that matters a lot. Chrysalis also said a funding-uncertainty discount had been introduced earlier, then unwound after a funding round in April 2026, only for a change in valuation methodology to drive the value lower again.

In plain English: this asset may have operational value, but turning that into cash for shareholders is not straightforward.

The wefox valuation error is a red flag investors should not ignore

There was another awkward twist. After the auditor reviewed the 31 March 2026 valuations, an error was found in the external valuer’s application of the wefox waterfall.

A waterfall is the order in which different classes of investor get paid when value is distributed. Get that wrong, and the equity value attributable to Chrysalis can be overstated.

The result was a downward adjustment of 3.33p per share, cutting NAV from the previously reported 137.27p to 133.94p. In money terms, that reduced net assets by £16.1 million.

This does not automatically mean the whole portfolio is misstated, but it is not a great look. When an investment trust already trades on a huge discount, valuation process errors undermine confidence further.

Liquidity, debt repayment and buybacks: some genuinely good news in the Chrysalis results

It was not all bad. Chrysalis ended 31 March 2026 with total liquidity of approximately £72.7 million, made up of £28.2 million of cash and cash equivalents plus £44.5 million of listed holdings in Klarna and Wise.

The company also reduced its Barclays debt facility materially during the period, repaying £52.8 million and leaving around £17.2 million outstanding at the half year end. That remaining balance, plus £0.6 million of accrued interest, was repaid in full on 25 June 2026.

To do that, Chrysalis sold its remaining Wise holding for £2.5 million and partially sold Klarna for proceeds of $8.9 million at $17.73 per share. That sale price was comfortably above Klarna’s 31 March 2026 valuation of $13.09 per share, which is a small but useful proof point that stated values can be monetised.

Buybacks also continued to help. The company bought back 26,625,733 shares in the period for approximately £29.3 million, and returned a total of £117.4 million under the programme before discontinuing it on 30 April 2026.

That said, future capital returns will now depend on cash realisations. So the easy buyback support has gone.

Chrysalis self-managed strategy and three-year realisation plan: cheaper, but riskier

The bigger strategic shift is that Chrysalis is moving to a self-managed model and has formally adopted an orderly realisation strategy. The aim is to maximise value from the existing portfolio over three years and return capital to shareholders as assets are sold.

The cost saving is meaningful. The new structure is expected to cost approximately £2 million in the first year, versus portfolio management costs of £4.6 million in the 12 months to 31 March 2026.

That is clearly positive. But the trade-off is concentration risk. The top three holdings now represent around 83.5% of NAV, and the top five represent approximately 94%.

So this has become a much more focused bet. If Starling, Smart Pension and Klarna are realised at decent valuations, shareholders could do well from here. If not, there is not much diversification left to soften the blow.

What Chrysalis Investments shareholders should watch next

• Whether Starling’s strong trading momentum translates into a higher valuation or a real exit route.
• Whether Klarna’s public share price recovery after 31 March 2026 can be locked in through further sales.
• Whether wefox’s improved funding terms actually lead to better recoverable value for Chrysalis.
• How quickly the Board can turn NAV into cash returns under the three-year realisation plan.
• Whether the market starts to trust valuations more after the wefox error.

My verdict on the Chrysalis interim results

This was a bruising set of results. The headline numbers are ugly, the valuation error is unhelpful, and the portfolio is now highly concentrated.

But there is a more nuanced angle too. The core holdings do not appear broken operationally, debt has now been cleared, costs are being cut, and the Board is explicitly focused on turning assets into cash.

So I would call this mixed, leaning negative in the short term but not hopeless. Chrysalis now looks less like a growth trust and more like a three-year workout story – one where Starling matters enormously, Klarna could still surprise on the upside, and wefox remains the problem child.

For investors, the discount is tempting. But that discount exists for a reason, and Chrysalis now has to earn back trust the hard way.