Chrysalis Investments has initiated a legal claim exceeding £45 million against makeup company Revolution Beauty, which has previously faced scrutiny over dubious business transactions and undisclosed loans. The £471 million growth capital investor has escalated its efforts against the AIM-listed company following its failure to deliver adequate responses to a letter of claim sent in November 2023.
Chrysalis’ legal representatives have submitted preliminary legal documents outlining a claim of £39 million, along with an additional claim for consequential losses amounting to £6.2 million. This action comes after former Jupiter managers Richard Watts and Nick Williamson acquired a stake in the company for £45 million in July 2021. They subsequently sold their position in late 2022 for £5.7 million, resulting in a substantial loss of 90%.
The growth capital fund has accused Revolution Beauty of engaging in “deceit, negligent misstatement, and/or misrepresentation” during its purchase of shares in the company. The fund initially acquired a £45 million stake in the affordable cosmetics company in July 2021. However, it later sold its shares for £5.7 million in 2022 following a significant decline in Revolution Beauty’s value, resulting in substantial losses.
Revolution Beauty’s shares were suspended in September 2022 after the company failed to release its audited results for the fiscal year 2022. An independent investigation conducted by auditor BDO revealed serious accounting and management deficiencies, including evidence indicating that co-founders Adam Minto and Tom Allsworth had provided personal loans totaling approximately £1 million to distributors and a senior employee.
Chrysalis Investments’ legal advisors have filed a claim of £39 million against Revolution Beauty, along with an additional claim of £6.2 million for “consequential losses.” In a Stock Exchange notice on April 22, the company stated its dissatisfaction with the responses received from Revolution Beauty and its legal advisors thus far.
