Investment Management Arrangements Update

The Board of Chrysalis has been working for some time on a significant revision to its existing structure in order to ensure the maximisation of value for its shareholders.

The recent shareholder consultation conducted by Rothschild & Co Equity Markets Solutions Limited ("Rothschild") provided the Board with useful insight into issues of capital deployment, management remuneration and approach, as well as the Company's relationship with Jupiter Investment Management Ltd ("Jupiter"), both as an investor in Chrysalis and as Investment Adviser. The consultation covered approximately 60% of the non-Jupiter related issued shares.

The purpose of the consultation was to inform the Board and Investment Adviser of the views of shareholders ahead of a set of proposals being put to them for approval on the date of the forthcoming Annual General Meeting ("AGM") in Q1 2024. It is the Company's intention to release relevant shareholder documentation (including a final proposed Capital Allocation Policy) at the same time as the year end accounts are published and the date for the AGM is set. Shareholders will have the ability at that time to vote on:

• the continuation of the Company; and
• the revised performance fee arrangements under the proposed new management arrangements (as described further below).

Aside from these issues, one of the key responsibilities for your Board has been the oversight of the Company's investment management agreement.

At the time of the IPO, the investment management agreement was with Merian Global Investors (UK) Limited ("Merian"). While the sale of Merian to Jupiter in 2020 changed this position, the key investment staff, including the two lead portfolio managers, Richard Watts and Nick Williamson (the "Managers"), remained the same. After considering all the implications of a potential change in manager, including the payment of a substantial termination fee, the Board's unanimous conclusion was that it wished the Company to continue to be run by the existing investment team.

Since that time, the Board has worked to ensure that the best processes are in place for the Company, resulting in the appointment of an independent valuation committee to enhance the quality of valuation work; the AIFM responsibility being taken in house; and risk reporting being better tailored to the product.

There remain, however, some outstanding issues that the Board believes need to be resolved and which could affect the potential development of Chrysalis. These revolve, primarily, around the provision of sufficient dedicated resources for the management team, and the reduction of various Jupiter-managed holdings in Chrysalis.

The Board is pleased to announce today that it has reached agreement with Jupiter and agreed Heads of Terms with the Managers to redraw the structure under which investment advisory services will be provided, which foresees the Managers leaving Jupiter to provide advisory services to the Company from a new entity.

The Board believes such a move is consistent with feedback from the recent shareholder consultation that demonstrated strong support for the Managers and their efforts in creating and running Chrysalis, a view which the Board shares. While the current NAV per share remains materially below its peak, recent events hopefully point to a more optimistic outlook, with yields generally softening and company specific news - such as discussion around Klarna's move towards IPO - also providing a more upbeat prognosis. Given the Managers' in-depth knowledge of the Company's portfolio, the Board is of the view that they are best placed to oversee the next stage of Chrysalis' growth.

The details of these arrangements will be set out in a forthcoming shareholder circular; however, a summary of the proposed new arrangements is as follows:

• Chrysalis and Jupiter have agreed that the six months' notice period under the existing management contract will be waived and the contract will terminate with effect from 1 April 2024.
• Jupiter has agreed to a reduction in the management fee, effective from 1 October 2023, from 50bps to 15bps (given likely limited investment activity in the current market environment pending the continuation vote), leading to an expected saving of approximately of £1.4m for Chrysalis shareholders over the six-month period to 31 March 2024.
• Jupiter has released the Managers from their employment contracts and employment restrictions, effective 31 March 2024.
• The Board has agreed, in principle, to enter into a tripartite contract with a new investment adviser formed by the Managers (that will also have as members and/or employ the existing executives who are focussed on the Chrysalis portfolio either immediately or following the end of their notice periods with Jupiter) to take over investment advisory services from Jupiter, and with G10 Capital Limited - part of IQ-EQ group's UK Regulatory and AIFM platform - to take over AIFM services for the Company, each with effect from 1 April 2024. As a consequence of this change, Richard Watts will be solely focussed, along with Nick Williamson, on the Company's portfolio.
• The Company's investment advisory fee will be comprised of (i) 50bps of net asset value per annum, which is commensurate to the level the Company has historically paid; and (ii) an additional AIFM fee of 5bps up the first £1 billion of net asset value per annum (3bps thereafter). The latter will fund both the significantly enhanced risk process that is anticipated to be established in cooperation with the Managers and the oversight of G10 Capital Limited. As noted above, the performance fee arrangements for the new investment adviser will be subject to shareholder approval at a meeting to be held immediately following the AGM. The proposed performance fee terms will be the same as those described in the Company's announcement on 13 October 2023.
• The new investment advisor to be led by the Managers will have a 12-month minimum initial term, following which the new agreement will be terminable on 6 months' notice.

A further announcement will be made when this agreement is finalised and entered into.

The new structure will allow investment in added resources for the management team, will make the most of IQ-EQ's regulatory and AIFM platform, which is used by a number of existing listed investment companies, and enable the Managers to focus their time soley on developing the Company.

The Board and the Managers believe the trends that led to the establishment of Chrysalis five years ago remain in force, especially the decline in IPO activity and the shrinkage of the UK stock market as a venue for listed companies. In many cases these trends have become more acute. It is also the Board's firm belief that this complete package of proposals will put Chrysalis in a better position to maximise the value of its exciting portfolio of holdings and enable it to pursue the strategy into the future for shareholders within a more transparent capital allocation policy in line with that announced in October 2023. As such, the Board plans to recommend the Company's continuation to shareholders at the vote on this matter at the forthcoming AGM. In the event that shareholders were to seek an orderly return of capital, a process which could take a number of years, the Board believes that the Managers are best placed to provide the relevant investment advice to the Company and that the terms of their remuneration (together with their significant alignment by virtue of their personal shareholdings) remain competitive with any potential alternative manager of such a strategy.

The information contained in this announcement derived from the value of the Company's investments has been provided by the relevant underlying portfolio companies and has not been independently verified by the Company. The information contained herein is unaudited.