Chrysalis upgrades Starling valuation despite cut-price Boden sale

Chrysalis Investments has increased its valuation of its Starling stake, despite Anne Boden, the fintech’s founder, selling her remaining shares at a cut-price of £1.7bn. The British investment trust stated that its holding is now worth around £403.9m, a £47.9m increase following an external review. This brings the group's potential valuation to approximately £3.4bn using Chrysalis’ benchmark.

This comes after Boden's share sale, which contrasts sharply with the £4bn she initially sought in a secondary share sale last year. Chrysalis dismissed speculation surrounding Boden's private sale, stating it did not impact the company's valuation. The London-listed trust hired a strategy consultancy to conduct a new independent valuation review of Starling, which divided the business into its digital bank and software-as-a-service platform Engine.

Chrysalis used a valuation range of five to six times its annual sales, similar to that of comparable private tech firms, resulting in a near £48m hike in its holding, making up 65.6% of its portfolio. Chrysalis adopted this midpoint valuation, following two quarters of reductions in its holding due to a decline in valuation multiples in fintechs and digital banks.

Boden's sale of her Starling share follows her recruitment of software engineers for a 'Moonshot' project, expressing excitement about the future of banking technology. Starling's earnings have dropped over the last year, with the firm reporting a £217m pre-tax profit, a 3% decrease from the £223m in the previous year.