Investor Presentation July 2019
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. 3
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 4
Portfolio Commentary As at March 31 st , 2019 • There were 11 holdings in the portfolio, 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 in Russia, yielded 6.1x cash on cash returns and an IRR of 65%. • We have a USD 56.6 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 31 st , 2019. NAV: USD 203.1 mln 5
Portfolio NAV Distribution by Geography (ex cash) 6
VEF Portfolio Invested Amount Mar'19 Fair Value Investment Company Geography Business Type % Ownership (USD mln) (USD mln) Date Turkey Payment Processing 21.1% 11.0 26.1 Jan-17 Brazil Secured Lending Platform 10.0% 25.0 25.0 Dec-17 Russia Payments & Consumer Credit 25.0% 8.8 18.0 Sep-15 Africa Mobile Money Marketplace 6.8% 14.6 16.4 Oct-15 Mexico SME Lending 11.7% 15.0 15.0 Jun-18 Emerging Europe Cross-Border Remittances 16.2% 8.9 12.6 Jun-16 Brazil Personal Finance Management 10.9% 30.0 11.0 Oct-17 Brazil Accounting SaaS 20.6% 5.3 8.6 Apr-17 Brazil Digital Investment Advisor 16.9% 3.7 6.2 Sep-17 Brazil Consumer Credit Marketplace 23.7% 2.6 4.9 Mar-16 Pakistan Mobile Wallet 20.4% 2.0 3.3 Jul-16 147.1 7
Recent Events and Highlights Company Level • Portfolio exits • VEF sold its remaining shares in Tinkoff Bank through 1Q19, completing our first portfolio exit. 6.1x CoC return and an IRR of 65%. • In June, VEF announced the exit of iyzico from the portfolio, resulting in an expected IRR of 65% and CoC return of 3.2x at the time of closing. • Share buyback continued - VEF repurchased 630k of its own SDRs to fund the Company’s long -term incentive programs. VEF has bought back 12.1 mln shares at an average price of SEK 1.89 since May 23 rd 2018. Portfolio Level • Nibo - Brazilian accounting SaaS for SMEs - closed a financing round whereby VEF invested an additional USD 2 mln. VEF holds 20.6% of the company. • FinanZero closed its Series B investment round in April, raising SEK 100 mln (USD 10.5 mln), leaving the company extremely well funded and placed to deliver on its strategy. VEF holds 18% of the company. • Magnetis announced a major strategic partnership agreement with GPS Investimentos, a Julius Baer Group company, accompanied by a funding round, in which GPS invested alongside VEF. Has the potential to deliver a step-change in its AUM. 8
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 it 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. 9
iyzico Exit Exit Rationale Return on Investment Cost of position (USD mln) 11 Total proceeds (USD mln) 34.7 1. Founders desire to sell In general, we back great entrepreneurs and look to stay Date entered position Jan-17 with them through to the point of their exit. In this Date exited position Sep-19 instance, after much healthy board debate, the founders Years in position 2.3 felt exiting was the right path. We saw the logic and were IRR 65% happy to back them on this decision. CoC return 3.2x 2. Significant return on capital Exit The return on capital on the position is significant and comfortably north of our benchmark goals. Mark to model 3. Turkey is a market, similar in many ways to Russia, that offers up fewer opportunities to exit quality assets versus others like Brazil or South Africa which have a more robust Initial investmen exit ecosystem through the cycle. t 10
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. 11
VEF Shares and Corporate Governance
Share Price, NAV/Share and the Discount Discount to NAV Share Price, NAV/share Date Latest Share Price NAV / Share* Discount NAV* Market Cap (SEK) (SEK) (USD mln) (USD mln) July 5, 2019 2.45 2.93 16.4% 203.1 170.9 *As at March 31, 2019 13
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 14
VEF Shareholder Structure Owner Holding, SDRs Holding, % Libra Fund* 161,110,674 24.4% Ruane Cunniff & Goldfarb* 118,888,736 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% Handelsbanken Luxembourg 15,288,000 2.3% Avanza Pension 9,391,718 1.4% 10 Largest Owners 532,104,268 80.4% Other 129,391,727 19.6% 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. 15
Recommend
More recommend
