Investor Presentation March 2019
Global Fintech Trends and Benchmark Names
Global Fintech Funding Trends Source: CB Insights 3
Global Fintech Funding Trends Source: CB Insights 4
Fintech Unicorns Source: CB Insights 5
Benchmark Listed Fintech Companies Europe Russia China $19.2B $3B $1.4B North America $21.2B $0.8B $5.6B $1.8B $1.6B $1.5B $1.6B $2B $1.6B $0.6B $28.9B Australia/NZ Brazil $98.7B $4.1B $6.9B $2.1B $7.3B 6
VEF Business Overview and Update
VEF – Emerging Markets Fintech Investors Within emerging and frontier markets, we focus on the more populous and scalable markets, referenced Geography against competition for opportunities. We target all lines of financial services inclusive of payments, credit, mobile money and financial Sector marketplaces. The “right” target sector is very market -dependent. Minority stakes and VEF targets sizeable minority stakes of 10 – 20% with board representation. We are active and supportive board seat shareholders. Private equity VEF is structured as a listed investment company while our mandate is to invest in emerging private access vehicle companies. Permanent capital is a unique positive given our mandate. Unique fintech There are very few ways to play the growing fintech investment theme in public markets and even less investment in the emerging world. VEF is a unique access asset in this regard. 8
Where Fintech Meets Emerging Markets CREDIT PAYMENTS OTHER FINTECH Consumer Offline Accounting SaaS SME Online Wealth Management P2P Mobile Digital Banks Credit Scoring Remittances Mobile Wallets Comparison Websites Personal Finance Managers Insurance 9
Portfolio Commentary • 11 holdings in the portfolio today, diversified by geography, business type and stage of development. • Early portfolio “winners” starting to make their mark within our NAV - Iyzico and Creditas. • Recently had our first exit with Tinkoff Bank, Russia, yielded 6.1x cash on cash return and an IRR of 65%. • We have a USD 58.3 mln capital position. • Pipeline remains healthy and our options and opportunities to continue to deploy capital in a value accretive way are very clear. VEF Portfolio as at March 2019. 10
VEF Portfolio Invested Amount Dec'18 Fair Value Investment Company Geography Business Type % Ownership (USD mln) (USD mln) Date Turkey Payment Processing 20.8% 10.7 25.9 Jan-17 Brazil Secured Lending Platform 10.0% 25.0 25.0 Dec-17 Africa Mobile Money Marketplace 6.8% 14.6 16.4 Oct-15 Brazil Personal Finance Management 10.9% 30.0 15.3 Oct-17 Mexico SME Lending 11.7% 15.0 15.0 Jun-18 Russia Payments & Consumer Credit 25.0% 8.8 14.6 Sep-15 Emerging Europe Cross-Border Remittances 16.2% 8.9 12.8 Jun-16 Brazil Digital Investment Advisor 16.9% 3.7 5.8 Sep-17 Brazil Consumer Credit Marketplace 23.7% 2.6 5.0 Mar-16 Brazil Accounting SaaS 15.7% 3.3 5.0 Apr-17 Pakistan Mobile Wallet 20.4% 2.0 3.3 Jul-16 144.1 11
Tinkoff Exit Exit Rationale Return on Investment Cost of position (USD mln) 19 Total proceeds (USD mln) 116.8 1. A publicly listed security We are focused on investing in the private space, providing Date entered position Jun-15 access for shareholders to the fast-growth EM fintech Date exited position Feb-19 Years in position 3.6 space they cannot otherwise access, so the public holding was always short-to-medium term in nature. IRR 65% CoC return 6.1x 2. Significant return on capital The return on the position had gone significantly north of our benchmark goals at a time when public markets have entered volatile territory. 3. Allocation of capital We look at Tinkoff and compare that to our alternatives – 1) putting more money into our current portfolio companies, 2) investing in new companies and 3) buying back our own shares in the market. It is a good time for us to have a strong capital position to work with. 12
Portfolio NAV Distribution by Geography (ex cash) 13
Brazil, one of our favourite fintech ecosystems 1. Scale – With over 200 mln inhabitants, Brazil is one of the world’s largest economies, and the kind of scalable emerging market we like to invest in. 2. Online – Brazil is one of the most ‘online’ markets in the world with high smartphone and internet penetration and a growing ecommerce market. 3. Oligopolistic Banking Sector – Brazil’s banking market is highly concentrated, with the top five banks holding 84% of total loans in the system, while fees and interest rates are some of the highest anywhere in the world. Yet, unlike many emerging markets, the Brazilian banking system is first-world in many aspects and its populous is experienced and comfortable in the use of a broad array of financial products 4. Regulation – The Central Bank of Brazil is very aware of the concentration of traditional financial service providers and are working to support the fintech ecosystem as a way of levelling the playing field and improving the financial wellbeing of the average Brazilian. 5. People and Ecosystem – We have found many strong entrepreneurs and teams in Brazil and also a very supportive VC and investment ecosystem into which to invest and partner. 6. Economic Cycle – Brazil is enjoying single-digit inflation and single-digit base interest rates, both of which are game changers for the financial system. In such a low rate environment, customers’ demands for better return and lower rate products are becoming more obvious and it is the numerous fintech companies that are driving the most attractive customer offerings in this brave new world of Brazilian rates. 14
VEF Shares and Corporate Governance
Share Price, NAV/Share and the Discount Discount to NAV Share Price, NAV/share Date Latest Share Price (SEK) NAV / Share* (SEK) Discount NAV* (USD mln) Market Cap (USD mln) Mar 25th, 2019 2.19 2.78 21% 201.4 156.4 * As at Dec 31, 2018 16
Our IR and Marketing Focus to Date Investor marketing and conversion has been excellent, the story resonates and we have a growing following in the market. We continually have new smaller shareholders in the base while a number of size investors are looking for blocks. Equity Research Formal Coverage Featured Research Roadshows and Conferences 17
The War on the Discount 1. Traditional Market Measures 2. Swedish-Specific Measures • • Show more exits – this has started with the We have an active tail of Swedish retail investors Tinkoff exit. who are are key to setting our market price. • • Increase investor marketing and improve Goal: to become a positive-focus stock for the investor relations in general. Swedish retail investor community. • • Buybacks – first program announced and active. The channels to reach this investor base are very different from the traditional institutional one. • Improve share liquidity – will be a function of • time and size. We have started to engage directly, partnering with local stock clubs and retail-orientated brokers. 18
VEF Shareholder Structure Owner Holding, SDRs Holding, % Libra Fund* 161,110,674 24.4% Ruane Cunniff & Goldfarb* 118,878,736 18.0% Fidelity FIL 66,149,599 10.0% Swedbank Robur Funds 57,674,245 8.7% Wellington Management* 33,736,296 5.1% Alecta Pension Insurance 33,500,000 5.1% Bank Julius Baer & Co 18,354,000 2.8% LGT Bank 18,011,000 2.7% Svenska Handelsbanken Luxembourg 15,288,000 2.3% Avanza Pension 9,622,483 1.5% 10 Largest Owners 532,325,033 80.5% Other 129,170,962 19.5% Total Shares 661,495,995 100.0% *Holding as per the latest notification to the Company. Based on Euroclear Sweden AB data and holdings known to the company. Including foreign nominees. 19
VEF Board and Management Share Ownership Shares Options Total % Shareholding Board Lars O Grönstedt 130,000 130,000 0.0% Per Brilioth 2,790,000 2,790,000 0.4% Milena Ivanova 600,000 600,000 0.1% Voria Fattahi 439,703 439,703 0.1% Total 3,959,703 3,959,703 0.6% Management David Nangle 3,216,190 1,905,000 5,121,190 0.8% Henrik Stenlund 451,185 500,000 951,185 0.1% Alexis Koumoudos 345,910 500,000 845,910 0.1% Helena Caan Mattsson 205,000 500,000 705,000 0.1% Elisabet Hultén 25,000 500,000 525,000 0.1% Total 4,243,285 3,905,000 8,148,285 1.2% Insider total Total 8,202,988 3,905,000 12,107,988 1.8% Total shares 661,495,995 100.0% 20
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