Chrysalis (CHRY ) fund managers Richard Watts and Nick Williamson have flagged an additional investment in Smart Pensions that could lift net asset value by 2.6% as they emphasise the company’s credentials ahead of a continuation vote next week.

The pair, who are set to leave Jupiter at the end of the month, taking the £517m growth capital fund with them, have invested £4m into the pensions technology platform alongside other investors, on top of the £2m they added in January. 

The duo said Smart, which provides workplace pensions, had grown strongly since they first invested in 2021, with the Smart Pension Master Trust now the UK’s third biggest master trust operator, boasting 1.3m members and nearly £5bn of assets under management.

Smart’s international business and the master trust are powered by Keystone, the group’s technology platform, that they said was ideally suited to consolidating pension schemes with high levels of automation and efficiency.

Smart will use the money to accelerate growth, including mergers and acquisitions to drive towards profitability ‘with significant progress towards break-even expected over 2024,’ the managers said.

Chrysalis shares have made a strong recovery, rallying 26% in the past three months as hopes for lower interest rates and a mooted flotation by credit provider Klarna, an 11% position, have encouraged investors after a difficult two-and-a-half years.

Reports have suggested the buy-now-pay-later company is seeking a $20bn (£15.6bn) valuation for a possible initial public offer (IPO) in the third quarter. With Chrysalis holding the company at an $11bn valuation, there is scope for a significant gain.

At 87.9p yesterday, the shares stand at around a 40% discount to NAV, far below their 271p peak in September 2021 and their 100p launch price in November 2018.

Stifel’s Iain Scouller said it would have been ‘helpful’ if Chrysalis provided details on how the Smart NAV uplift was calculated.

‘In the meantime, we retain a “hold” rating with a fair valuation of 86p, a 40% discount to the latest NAV of 143.4p at the end of December. This level of discount is not dissimilar to that on many of the listed private equity funds, who generally have stronger balance sheets in our view.’

The analyst said the company needed a profitable exit from Klarna, or another investment, as liquidity levels, which include cash and £13.6m of shares in listed payments company Wise (WISE), had fallen to £27.2m. That is not much given other holdings are likely to require further funding.

Chrysalis’ corporate broker Deutsche Numis expected the company to pass the continuation vote next Friday, given its improving prospects and a commitment by the board to return £100m of realisation proceeds to shareholders through share buybacks.

‘We think that the future is bright for Chrysalis and highlight that a potential IPO/exit from the portfolio would substantially alter the liquidity profile of the fund,’ Numis analyst Ewan Lovett-Turner said.