Chrysalis Investments has lifted the value of its stake in Starling despite the recent cut-price share sale by the fintech’s founder Anne Boden.

The British investment trust said on Monday its holding carried a price tag of around £403.9m, up by £47.9m following an external review. The trust holds around an 11 per cent stake in Starling, which would give the broader group a valuation of around £3.4bn when using Chrysalis’ benchmark.

It comes just weeks after news emerged that Boden, the group’s former chief executive, offloaded her remaining stake in Starling at a valuation of just £1.7bn marking a far cry from the £4bn the firm sought in a secondary share sale last year.

Chrysalis said it noted the speculation around Boden’s private sale but “considered its nature” and did “not believe that it impacts the company’s valuation”.

The London-listed tapped a strategy consultancy to conduct a new independent valuation review of Starling that split the business into two distinct parts: its digital bank and software-as-a-service platform Engine.

Analysts at Jefferies said the uprating was “at odds” with the valuation implied by Boden’s sale, but added they did not see the latter as “a meaningful valuation input given the small size of the transaction and as a sale of the last part of her stake.”

“Against this, the fact that the write-up was due to an independent valuation report is reassuring, although, in our view, the path to liquidity on the investment is still unclear,” they said.

Chrysalis brings in outsiders to value Starling

The report priced both parts of the business at five to six times their annual sales, based on what similar private tech firms are worth. This produced a higher valuation range, paving the way for the near £48m uplift in Chrysalis’ holding of Starling, which accounts for 65.6 per cent of its portfolio. 

Chrysalis said it had adopted a valuation “at the midpoint of the report’s range”.

It follows the trust marking down its holding for two consecutive quarters this year, citing a decline in valuation multiples in its tracker set of high-growth fintechs and digital banks.

The group reduced the holding to £356m in the second quarter following successive five per cent and 14 per cent cuts.

Boden’s sale of her remaining Starling stake comes after she began recruiting software engineers for a project named ‘Moonshot’. She said she was seeking engineers who had a background in banking technology “who are excited about what the future could like”.

The founder’s cut-price deal is expected to add to investor concerns after Starling’s earnings slid over the last year. The firm posted a £217m pre-tax profit, down three per cent from the £223m secured in the prior year.