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Chrysalis merger gets go-ahead

Chrysalis shareholders have voted in favour of merging four VCTs to streamline performance, the first time for such a VCT merger.

Chrysalis A, B and C and the Chrysalis VCT are to merge at a cost of around 400,000. Industry predictions had been that the costs a merger would be around 500,000.

The VCTs were formerly managed by Classic Fund Management but management has been brought in house at Chrysalis under Chris Kay, a former board member who has stepped down from the board.

In late 2003, Robert Drummond took over chairmanship of the board of the Chrysalis VCT, having been a non-executive director and dissatisfied with performance. He started implementing changes which have reduced the board from seven members to two plus himself as chairman and has repeated these changes across all four VCTs so the membership of all the boards is identical and ready to merge. The remaining board members are Nick Lewis and Julie Baddeley.

Proposals for the merger were announced on January 17, with shareholder votes in favour reaching the necessary 50 per cent at the weekend.

Chrysalis chairman Robert Drummond is pleased that the merger is going ahead. He says: “We have bent over backwards to ensure that this process has been transparent and well governed. We are now directly responsible for the performance of the Chrysalis VCT and if it does not perform it is my fault. In the past, the managers of VCTs have tended to be at one remove from reality, which has not helped performance.”

Hargreaves Lansdown investment manager Ben Yearsley says: “This is good for the shareholder. It will reduce costs and provides better value for investors. The costs will be borne by shareholders but you have to look to the future and ask whether Chrysalis will be able to make more from a streamlined operation.”

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