Jupiter dumps Starling Bank, rules out unlisted stock

Chrysalis, an investment trust, buys a PS20mn stake at digital bank .Jupiter Asset Management has sold its stake in digital bank Starling and has created a policy to stop its open-ended funds buying into private companies to reduce risks for investors.

According to a letter sent by Jupiter from its clients , the fund group has reached a deal to sell its stake in Starling to institutional investors. This stake is equivalent to 6% of the PS1bn Jupiter UK Middle Cap fund. Starling is also held by Jupiter in a limited number of its products.

Starling shareholders, which includes the investment trust Chrysalis, are the buyers of the Starling stake. Starling had a value of approximately PS2.5bn at its last round of funding in April 2022. However, the past few years have been difficult for technology stocks. The valuations of unlisted businesses, including Klarna payments businesses, has declined as interest rates have risen and investors have retrenched.

Chrysalis stated in a Tuesday evening statement that it had agreed to buy PS20mn equity. This account accounts for 15% of the total investments. Starling is supported by Goldman Sachs and Fidelity Investment Manager, as well as the Qatar Investment Authority.

Jupiter and Starling did not comment.

In a letter to clients, Matt Beesley, chief executive at Jupiter, stated that “as the result of the continued market volatility that we have experienced in the recent years, it is also evident to us that investor sentiment toward holding unlisted assets and open-ended funds hat changed.”

Jupiter stated that it will no longer allow open-ended funds to invest in unlisted businesses. These companies are more difficult to trade than those listed on stock exchanges. This protects investors from being too exposed to unlisted businesses during a market sale.

Beesley stated that while we still hold very few stakes in unlisted assets, we will manage these exposures prudently over time to maximize value for our clients.

Fund groups usually have a limit on unlisted holdings within a fund. In the case of Jupiter’s UK Mid Cap fund, this was 10 percent.

Starling, founded by Anne Boden in 2014, will likely be one of the beneficiaries of the rising interest rates environment. It has been criticized for its exposure to government-backed bounceback loans , raising concerns about borrowers failing to repay.

Jupiter holds a stake in Chrysalis. However, the company’s tumbling valuations have caused a tough run for it, including Klarna and Klarna. Last week, the investment trust reported that its net asset value had dropped 13% in the last quarter of last year.

Boden previously stated that she hopes to flot the Starling Bank in the next few years. App-based bank that offers current accounts to individuals and businesses. It also grew its loan portfolio during the pandemic, largely thanks to the Covid lending program.

The bank acquired Fleet Mortgages and home loan portfolios from other lenders, including Kensington Mortgages, to expand its loan book.

Starling stated last month that the pre-tax profit for 2023 would be PS250mn based on approximately PS600mn in revenues.

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