Annual Report • Jan 25, 2023
Annual Report
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The emerging market fintech investor
No significant events after the end of the period.
Visit VEF's IR page for our financial reports and other information: vef.vc/investors
The financial result for the fourth quarter is principally a reflection of the decrease in valuation of the underlying portfolio (-12%) QoQ. Valuation changes in individual portfolio names were mainly driven by market moves in their respective listed peers coupled with moderately revised revenue forecasts, in parts, reflecting plans to reach profitability. The result for the quarter broadly mirrors the valuation decreases in global fintech indices, which experienced a further sell-off during the period. On an aggregated level, and specifically amongst the top portfolio names, underlying delivery remained strong and broadly on track vs. updated and profitability focused forecasts.
| Dec 31, 2020 | Dec 31, 2021 | Dec 31, 2022 | |
|---|---|---|---|
| Net asset value (USD mln) | 388.1 | 761.7 | 381.8 |
| Net asset value (SEK mln) | 3,178 | 6,885 | 3,981 |
| Net asset value per share (USD) | 0.47 | 0.73 | 0.37 |
| Net asset value per share (SEK) | 3.83 | 6.61 | 3.82 |
| VEF AB (publ) share price (SEK) | 4.04 | 6.05 | 2.45 |
Net asset value per share change YoY (SEK)
2022 was a year when markets reminded you that building a business and delivering through cycle return on capital is hard – which is how it should be! If not, everyone would be doing it and it felt for a period, pre-2022, that nearly everybody was. Today, with inflation elevated, rates rising, capital less available and more expensive, the strong macro tailwinds for the industry have evaporated.
So, what does it mean for VEF?
Going into year eight of our journey, the structural growth story and opportunity for fintech within emerging markets remains clear, that is a constant. That said, one has to be extremely vigilant in volatile windows such as these. The bullets are flying, be them macro, sector or micro company directed, and one needs to be ready. It remains a window to play defence, first and foremost, constantly striving to be one to two steps ahead of it all. Then make forward moves carefully and above all, be patient and keep your head. We work hard to avoid the bullets and this year we have avoided the pitfalls in China, had minor exposure to Russia (written down in 1Q22) and are not exposed to the broader crypto ecosystem. Our top holdings, which make up the majority of our NAV and define our near-term success, remain in good shape, wellfunded to continue a robust growth story and in many cases through to break even.
One of my great learnings from this window, is that we have built deep quality through-cycle muscles at VEF – proper long term business building blocks. We have come a long way since our launch in the summer of 2015. This is most apparent in the quality of our team, our ingrained processes, through cycle battle scars and learnings, quality of portfolio companies and our valued shareholder base, all of which has kept us on the front foot through a difficult period for markets. This base has allowed us to gradually lean forward in 2H22 and start to seek opportunity in the next leg of value creation for VEF and our shareholders. This is what drives us and gets us excited as we look into 2023 and beyond.
In 2Q22, we moved fast to re-adjust our NAV to reflect the current public market reality, reducing our USD NAV 40% at that point. With that in place, and in the absence of a vibrant funding market, our quarterly NAV moves are largely a slave to the evolution of public markets – as they track the moves of public comparable listed companies and FX, alongside the evolution and roll over of our underlying financial models for each company.
While this can lead to a higher level of NAV mark quarterly volatility versus the majority of our private Venture fund peers, it does allow our marks to stay fresh and be reflective of the prevailing public market view. Hence, we are constantly in a position to stand behind our NAV.
We end 4Q22 with a NAV per share of SEK 3.82, down 20% QoQ and down 42% YoY. Total USD NAV ended the quarter at USD 382 mln, down 14% QoQ and off 50% YoY. The 8% strength of SEK vs USD QoQ drove NAV growth currency differential.
Specific to the quarter, global equity markets sold off again into the close of 2022. Of specific relevance to VEF, the average of global fintech indices we track (baskets of publicly traded fintech benchmark stocks) sold off further in 4Q22 and ended the year off 58% for FY22. Key portfolio currencies (BRL, MXN, INR, PKR) were broadly flat QoQ in 4Q22 versus USD.
The biggest portfolio valuation moves in the quarter were Creditas and Konfío. Creditas saw a moderate 8.7% QoQ valuation mark reduction, with peer comps pullback the main drag on our quarterly mark. We invested an additional USD 5 mln into Creditas via a convertible note in the quarter. We reduced our valuation mark in Konfío by a more substantial 34% in 4Q22. The main driver of this lower mark was peer comp sell-off over the quarter. We also moderately reduced our top line forecasts for the company as they drive a path towards break even, with moderated growth a key input. It is key to note that we are now valuing our stake in Konfío below our level of invested capital in the company, and thus below what our preferred shares would pay out, if the company was to exit at our current company valuation mark or above.
Two smaller portfolio names we applied valuation haircuts in the quarter were Finja and Magnetis (combined less than 1% of the portfolio). We moved Finja to mark-to-model valuation in 3Q22 and despite strong performance of late, post raising additional capital in 4Q22, we would prefer to rebuild our valuation mark with further delivery through 2023. The mark down in value of our stake in Magnetis reflects a more conservative plan for the business given the company's lower than average runway and the current environment for growth in the investment subsector.
The lower mark in JUMO is transaction timing driven. The company is in the process of carrying out a necessary and transformative funding round, that was not yet completed by YE22. As a result, we moved to value the company on the basis of a "no new capital" scenario, and hence a different set of cautious assumptions versus what would be the case post a successful raise. This is something we will look to address further in our 1Q23 report.
These moves, while NAV negative in the quarter, continue our conservative stance on valuation marks through 2022 and are reflective of the year that was. We like to keep a consistency of process in the eyes of our audit committee, auditors and most importantly the market, even if it can be overly harsh in terms of valuation mark output. On top of these 4Q22 changes, as a reminder, we moved REVO to a zero-valuation mark in 1Q22, post Russia's invasion of Ukraine (despite the company delivering double digit MUSD earnings in 2022). Overall, our NAV is off 50% YoY in USD terms in 2022, which ends up broadly in line with the performance of global fintech indices. While this performance disappoints us, as managers and shareholders, we are much happier to be able to stand behind our NAV and work it back up from this lower base.
On a more positive note, as we look ahead into 2023, we remain comfortable that there is a lot of value creation to come through. This is especially evident in the top half of our portfolio and specifically in Creditas, which continues to show strong delivery as evidenced by quarterly filings. Other standout names which show
clear 2023 valuation uplift potential include Juspay and Gringo. Both current valuation marks grow in conservativism given their continued strong underlying performance and the growing embedded discount they trade at to peers.
Finally, a clear output of the valuation process through 2022 has been a growing concentration of our portfolio to our larger "outperforming" holdings, something which we welcome. At the end of 4Q22, we sit on USD 48.5 mln of capital.
Looking back on the year, I am pleased with how team VEF responded and adjusted focus to the changing environment. As investors in emerging markets, one is always ready for volatility and curve balls, this mindset is a constant.
Looking back, in 1H22, we were quick to go on the defensive as market mood music changed. First, we strengthened our balance sheet, raising our first sustainability bond. At portfolio level, we overly focused on our size holdings, namely Creditas, Konfío and Juspay (67% of portfolio at YE22), ensuring they were in a strong capital position to continue to grow at a healthy clip through to planned break even. We then addressed our NAV mark in our 2Q22 filing, given the sharp sell-off in public markets over that YTD period, and rebased it to a more conservative level. With our defence in place, 2H22 was a period where we started to lean back on the front foot. Specifically, we spent increasing time in our core investment ecosystems with VC partners, portfolio companies and pipeline. We were back marketing the VEF story to global investors, off strong underlying trends in our portfolio companies and a rebased NAV. Finally, given the dislocation between VEF's share price and the intrinsic value we see in our portfolio, we launched a share repurchase program.
At YE22, as a result of these actions, we feel we are in a good place, despite plenty of stress and volatility swirling in the system.
We like the growing business and financial transparency from Creditas and the benefits and look through it provides to the market on VEF. In this vein, in November, Creditas released its headline IFRS results for 3Q22, posting robust 98/90% YoY revenue/loan growth. In 2H22 Creditas has started to target more modest loan growth rates and focus on portfolio repricing. This repricing is clear, with pre-fixed loans pricing, for example, moving from 32% p.a. in Sep-2021 to 49% p.a. in Sep-2022. This has only started to feed through to gross profit margins, which bottomed out at c. 10% through 2Q/3Q22 and are set for strong recovery over the coming quarters. Management expects to regain 40–50% gross profit margins levels as this plays out through 2023. Below this line, Creditas continues to rationalize its overheads, drive efficiency gains, and bring down customer acquisition costs to lowest levels experienced. This is all ongoing while asset quality remains in solid shape given the collateralised nature of the loan book. It is this interplay of forces; 1) moderated but still robust portfolio growth, 2) loan repricing, 3) Selic peaking and funding costs with it, 4) cost and CAC optimisation and 5) stable asset quality, that excite us and provide a great risk/reward story as Creditas drives a path to profitability in 2023. Creditas continues to benefit from the timely Andbank equity injection in summer 2022 and the top up of the convertible loan note linked to that, in which VEF participated with a USD 5 mln additional investment in 4Q22. On the IPO front, the aim is to be ready to act when the market re-opens for business.
Given the nature of 2022, we overweighted our time living and working with our core portfolio companies. We have always been active shareholders, with board seats in the majority of our holdings, and in times like these, this is key. While pipeline building continues and investing remains a key facet of long term success, much of the unseen value creation in VC world is in the farming of current holdings, versus the hunting for new ones. So, 2022 was a year that
we spent in the trenches with our founders, and I am happy to report that we are there with some great people and companies who are up for the fight in a capital tight, macro headwind world. Emerging markets tend to build founders like this, as it is just a tougher through cycle environment to succeed in.
We acknowledge that we tend to overweight our communication towards the top end of our portfolio, namely Creditas, Konfío and Juspay, given their relative size and importance to our current NAV. But there are so many exciting stories within the portfolio, ones that had a robustto-stellar 2022 despite the environment, some of which will be vying for these top portfolio spots in the quarters/years to come. I touch on a few below, with different degrees of defined success for each in 2022.
• In 2022, Nibo (accounting software for SMEs in Brazil) achieved a significant milestone as it turned operationally profitable, becoming stewards of their own destiny. The business is now generating cash while continuing to deliver growth. Of more interest is that recent growth has being driven by more sales to SMEs versus traditional accountants - a much larger target market with increased ability to pay. With the launch of its new product for finance BPOs (Business Process Outsourcing), Nibo is now the only platform in the market that connects clients, accountants and their BPO providers. We are very excited by these developments at Nibo and shows how; 1) it can take time and 2) there are many ways to win, in a journey to build a sustainable business.
The VC funding market has been broadly dislocated through 2022. Investors, on average have been in risk-off mode as they allow markets and valuations to find a fresh floor. On the supply side, many of the best EM fintech companies that raised capital in size through 2021, have had no immediate capital needs and have been avoiding looking to test an unfriendly funding market. Those who have needed capital, have been looking internally first, for ways to tap fresh or bridge capital. So, the market became quite shallow, transaction light and very inward focused on own portfolios.
Through 4Q22, there are early signs that some companies are, once again, stepping out and looking to get ahead of the curve and bolster capital levels. We are starting to see many quality fintech companies, who's underlying businesses we always liked, but whose valuations had started to run away with themselves through 2021 have now started to come back into play. We are also in the early innings of a secondary market shake out, as company cap tables start to recycle – early-stage investors looking for exit windows coupled with a lot of investors finding themselves outside their comfort zones or investment zip codes in EM privates, at the wrong point in the investment cycle. This all screams opportunity to VEF and an opportunity we are actively working on as we look into 2023.
It is clear to us that there is a great investment vintage in the making here and with our team and experience, we firmly believe we are well placed to take advantage of it. As always, we will lean in when we feel the opportunity is ripe.
We have been stress tested again and learned a lot in this window. We have a quality team and portfolio, whom I am very happy to be in the trenches with. We are proving ourselves through yet another crisis, as is the way in emerging markets. This is something we know lays the foundations for long term success. We also have a great set of through cycle investors, who continue to have our back in windows of macro and market dislocation, something we readily acknowledge and respect. After playing defence through 1H22, from an investment perspective, 2H22 has been time to provide support to our portfolio companies and has become a classic window to buy back our own shares. Patience is key at this time, as we await private markets to settle and the right assets to appear at the right price point. At VEF, we invest in fintech across the emerging world, riding one of the strongest multi-year secular growth trends in some of the world's fastest-growing markets. Long a portfolio of quality emerging markets fintech holdings, while selectively shopping for new holdings, we are as well-positioned as ever to create long term value for our shareholders.
January 2023, Dave Nangle
VEF's net asset value per share decreased by 13.6% in USD over 4Q22, while VEF's share price in SEK increased by 13.5%. During the same period, the MSCI Emerging Markets index increased by 9.7% in USD terms.
The Company has investments in money market funds and bonds as part of its liquidity management operations. As at Dec 31, 2022, the liquidity placements are valued at USD 39.9 mln.
| Company | Fair value Dec 31, 2022 |
Net invested amount |
Net investments 2022 |
Change in fair value 4Q22 |
Change in fair value FY22 |
Fair value Dec 31, 2021 |
Valuation method |
|---|---|---|---|---|---|---|---|
| Creditas | 193,076 | 103,356 | 5,000 | -23,251 | -206,047 | 394,123 Calibration 1 methodology |
|
| Juspay | 47,471 | 21,083 | 4,098 | – | 953 | 42,420 Latest transaction 1 | |
| Konfío | 40,146 | 56,521 | – | -20,953 | -95,436 | 1 135,582 Mark-to-model |
|
| Solfácil | 20,000 | 20,000 | 20,000 | – | – | – Latest transaction 1 | |
| TransferGo | 16,347 | 13,877 | – | -558 | -12,924 | 1,2 29,271 Mark-to-model |
|
| Rupeek | 15,195 | 13,858 | 1,873 | – | 170 | 13,152 Latest transaction 1 | |
| Gringo | 12,250 | 12,250 | 12,250 | – | – | – Latest transaction 1 | |
| FinanZero | 8,085 | 5,163 | 991 | 618 | -4,788 | 11,882 Latest transaction 1,2 | |
| Abhi | 7,585 | 1,798 | 448 | – | 5,787 | 1,350 Latest transaction 1 | |
| BlackBuck | 6,894 | 10,000 | – | -226 | -3,106 | 1 10,000 Mark-to-model |
|
| Nibo | 6,817 | 6,500 | – | 134 | -5,743 | 1 12,560 Mark-to-model |
|
| Magnetis | 2,637 | 6,668 | 1,000 | -3,404 | -8,889 | 1, 10,526 Mark-to-model |
|
| JUMO | 2,322 | 14,614 | – | -6,507 | -16,087 | 1 18,409 Mark-to-model |
|
| Mahaana | 1,000 | 1,000 | 1,000 | – | – | – Latest transaction 1 | |
| minu | 541 | 450 | – | 116 | 91 | 1 450 Mark-to-model |
|
| Finja | 434 | 2,925 | – | -2,490 | -6,917 | 1 7,351 Mark-to-model |
|
| REVO | – | 6,664 | – | – | -13,235 | 1 13,235 Mark-to-model |
|
| Liquidity investments | 39,877 | 38,300 | -7,000 | 337 | -3,765 | 50,642 | 1 |
| Investment portfolio | 420,677 | 335,027 | 39,660 | -56,184 | -369,936 | 750,953 | |
| Cash and cash equivalents | 8,612 | 11,131 | |||||
| Other net liabilities | -47,458 | -356 | |||||
| Total net asset value | 381,831 | 761,728 |
This investment is shown in the balance sheet as financial asset at fair value through profit or loss.
Attributable to currency exchange differences.
* The MSCI Emerging Markets Index is a free float weighted equity index that consists of indices in 24 emerging economies.
The investment portfolio stated at market value (TUSD) at December 31, 2022
Fair value (USD):
1.9% JUMO's latest valuation mark, down USD 6.5 mln, 73.7% decrease QoQ, reflects a "prefunding round closure" conservative case. Through December 2022, JUMO was in the process of raising fresh capital, but the round had not completed by end of period. Hence, in 4Q22 we forecast and value JUMO on a "no fresh capital basis" and a different set of cautious assumptions versus what would be the case post a successful raise. JUMO is valued on a mark to model basis.
While Creditas posted record revenues in 3Q22, up 173% for the 9M22 period compared to the same period last year, with a continued strong outlook, the value of our stake in the company fell 8.7% or USD 18.3 mln (incl. our USD 5 mln convertible bond investment), during the quarter, a reflection of a derating of public peers. We continue to value Creditas using a calibration methodology.
Creditas is building an asset focused ecosystem that supports customers in three essential aspects: living (home), mobility (transport) and earning (salary) by providing fintech, insurtech and consumer solutions. One of LatAm's leading private fintech plays, Creditas is on a clear path towards IPO.
In 4Q22 VEF made a follow-on investment of USD 5 mln into Creditas as part of a convertible round taking the total invested amount in Creditas to USD 103 mln.
Founded in 2020, Gringo is building a "super-app" for drivers in Brazil and currently offers vehicle-documentation related services, credit and insurance solutions. Gringo is focused on improving drivers' vehicle ownership journey in Brazil, which is currently riddled with pain points driven by analogue processes, massive paperwork and broken legacy systems. In 1Q22, VEF invested USD 12.2 mln into Gringo, leading its USD 34 mln series B round together with Piton Capital which also saw participation from existing investors.
Solfácil is building a digital ecosystem for solar energy adoption in Brazil. It currently offers a digital solar panel marketplace and financing solutions on its platform, allowing Brazilian consumers and SMEs to finance and own their solar panels.
C round led by QED and also saw participation from SoftBank and existing investors. The round was subsequently extended to USD 130 mln with an additional USD 30 mln contribution from Fifth Wall in 2Q22.
to give millions of customers access to credit from a network of 60 lenders at the best rates and terms in the market in one search.
VEF made its initial investment into FinanZero in 2016, with the latest follow-on investment of USD 1 mln taking place in 2Q22.
Our stake in Konfío saw a 34% valuation decrease during the quarter, driven mainly by lower public peer multiples coupled with moderately reduced revenue forecasts reflecting a plan to reach profitability. The resulting valuation decrease in USD terms was 21.0 mln. We value Konfío on a mark to model basis as in 3Q22.
Konfío presented their Sustainability & Impact report, outlining how they identify and measure their impact on three main core areas: Corporate Governance, Diversity & Inclusion, and Ethical Products & Processes.
Solfácil has released a study on the potential savings in energy costs from home solar energy Solfácil study showed that the investment in a solar energy system can generate up to BRL 600 thousand in savings for Brazilian consumers over a period of 30 years.
Creditas reported YoY top line revenue growth of 173% for the 9M22 period. The company is successfully repricing up its portfolio and increasing efficiency, all of which is driving operational leverage and robust trends in 4Q22. We expect these trends to continue into 2023.
Fair value (USD): 6.8 mln Share of VEF's portfolio: 1.6%
VEF stake: 20.1%
VEF stake:
16.8%
Share of VEF's portfolio: 0.6%
Fair value (USD): 2.6 mln
Fair value (USD): 15.2 mln
Share of VEF's portfolio: 3.6%
VEF stake: 2.3%
Share of VEF's portfolio: 11.3%
VEF stake: 10.2%
| Fair value (USD): 6.9 mln |
|
|---|---|
| Share of VEF's portfolio: 1.6% |
|
| VEF stake: 1.0% |
|
Magnetis is a digital investment advisor democratizing access to affordable and easy-touse investment management. Magnetis offers customers a simple, digital tool to manage their wealth.
Since 3Q17 VEF has invested USD 6.7 mln into Magnetis with the latest investment of USD 1.0 mln made in 2Q22.
Juspay is India's leading payment technology company offering a unifying layer of products and value-added services to merchants, thereby enabling them to improve their conversion rates. Juspay has played a key role in India's payment transformation and is present on 300 mln+ smartphones and processing USD 80 bln+ annualized TPV.
VEF has made a cumulative investment of USD 21 mln into Juspay, investing USD 13 mln leading its broader Series B round in 2020 and investing USD 8 mln in its series C round in 2022.
Rupeek is one of India's leading asset-backed digital lending platform offering low interest rate doorstep gold loans and gold backed credit cards to consumers. Rupeek is building products to make credit accessible to Indian households, which hold over 25,000 tonnes of gold worth c. USD 1.5 tln.
In 2022, Rupeek raised an additional USD 49 mln in its Series E extension round led by Lightbox with a participation of USD 7 mln from VEF. In total VEF has invested USD 14 mln into Rupeek.
Share of VEF's portfolio: 0.1% VEF stake: 1.2% minu is an employee financial wellness company offering a digital compensation and benefits platform to thousands of employees in Mexico. minu's platform provides benefits including insurance, telemedicine, financial education, savings and credit product, and minu's market-leading salary-on-demand offering. VEF made its initial investment of USD 0.5 mln into minu in 1Q21.
Nibo is the leading accounting SaaS provider in Brazil, transforming the way accountants and SMEs interact. Nibo services over 350 thousand SMEs through 4,100 accountants on their platform.
Since VEF's initial investment into Nibo in 2Q17 VEF made two follow-on investments in 2019 and 2020 and has in total invested USD 6.5 mln.
BlackBuck is the largest online trucking platform in India digitizing fleet operations for truckers (payments solutions around tolls and fuel) and operating a marketplace matching trucks with relevant loads. BlackBuck represents VEF's first investment in the 'embedded fintech' space.
VEF made its initial USD 10 mln investment into BlackBuck in 3Q21.
Konfío builds digital banking and software tools to boost SME growth and productivity in Mexico through three core offerings: credit, payments and SaaS.
in Konfío's USD 110 mln Series E2 round led by Tarsadia Capital in 3Q21.
TransferGo provides low-cost, fast, reliable digital money transfer services to migrants across Europe, with customers paying up to 90% less compared by using banks and have their money delivered securely in minutes.
VEF first invested in TransferGo in 2Q16 and has invested a total of USD 13.9 mln into the company.
| VEF stake: |
|---|
| 13.8% |
VEF stake: 4.5%
| Share of VEF's portfolio: |
|---|
| 0.2% |
Share of VEF's portfolio:
0.6%
| Fair value (USD): |
|---|
| 1.0 mln |
Fair value (USD): 2.3 mln
VEF stake: 21.2%
Share of VEF's portfolio: 0.1%
| Fair value (USD): |
|---|
| 0.4 mln |
| VEF stake: |
|---|
| 11.5% |
Total gross investments in financial assets during FY22 were USD 81.7 mln.
During 1Q22 VEF invested USD 32.2 mln into two new portfolio companies. USD 20.0 mln into Solfácil, Brazil's largest digital solar panel marketplace and financing platform and USD 12.2 mln into Brazilian Gringo and their super-app and one-stop shop for drivers.
During 2Q22 VEF deployed an additional USD 6.6 mln into the current portfolio. Follow-on investments were made into Juspay (USD 4.1 mln), FinanZero (USD 1.0 mln), Magnetis (USD 1.0 mln) in form of a SAFE note, and Abhi (USD 0.5 mln). VEF also took up its right and converted the outstanding SAFE note in Abhi (USD 0,5 mln) to shares in the company. USD 35.0 mln was also invested in liquidity placements during the quarter.
During 3Q22 VEF invested USD 1.0 mln into new portfolio company Mahaana, Pakistan's first digital wealth management company. VEF also deployed an additional USD 1.9 mln into portfolio company Rupeek.
During 4Q22 VEF invested 5.0 mln into Creditas in form of a convertible note.
Gross divestments in financial assets during FY22 were USD 42.0 mln, of which all relates to divestments in liquidity placements.
VEF AB (publ)'s share capital per December 31, 2022, is distributed among 1,106,675,373 shares with a par value of SEK 0.01 per share. For more information on the share capital please refer to Note 5.
In August VEF announced that the Board of Directors had approved a new share buyback program based on the mandate from the annual general meeting of the Company on May 10, 2022.
The new buyback program allows VEF to buy shares for a maximum of USD 10 mln in total. The purpose of the buyback program is to allow the Company the flexibility to create additional shareholder value and optimize the Company's capital structure as and when deemed appropriate by reducing the Company's share capital. As per the end of FY22 the company holds 12,824,243 repurchased shares equivalent to USD 2.9 mln.
During FY22, the result from financial assets at fair value through profit or loss amounted to USD -369.9 mln (FY21: 284.6).
During 4Q22, the result from financial assets at fair value through profit or loss amounted to USD -56.2 mln (4Q21: 210.7).
The financial result for the fourth quarter is principally a reflection of the decrease in valuation of the underlying portfolio (-12%) QoQ. Valuation changes in individual portfolio names were mainly driven by market moves in their respective listed peers coupled with moderately revised revenue forecasts, in parts, reflecting plans to
Finja is a digital lending platform for SMEs in Pakistan, providing small-ticket loans and invoice financing to kiryana stores and for FMCG distributors to purchase inventory on credit.
VEF has invested a total of USD 2.9 mln into Finja since 2016.
Abhi is a financial wellness company for businesses and their employees in Pakistan, offering earned wage access, invoice factoring and payroll solutions.
VEF led Abhi's Seed round in 2Q21 and has invested a total of USD 1.8 mln into the company, most recently participating in Abhi's Series A with an investment of USD 0.5 mln in 2Q22.
Mahaana is Pakistan's first digital wealth management company, building a platform to allow working class Pakistanis to better invest their savings and pensions in a market where the individual savings rate significantly lags peers.
VEF invested USD 1 mln into Mahaana as part of their seed round in 3Q22, co-leading the USD 2.1 mln round with SparkLabs Group and local strategic partner IGI Holdings.
JUMO is a full technology stack for financial services that enables partner banks to reach millions of new customers with credit and savings products at affordable prices whilst making predictable returns. JUMO provides a full range of infrastructure and services from core banking to underwriting, KYC and anti-fraud and recently achieved B Corporation certification.
In 4Q21 JUMO raised USD 120 mln from new and existing investors in a round led by Fidelity Management, Visa and Kingsway. VEF has invested a total of USD 14.6 mln in JUMO since 2015.
reach profitability. The result for the quarter broadly mirrors the valuation decreases in global fintech indices, which experienced a further sell-off during the period. On an aggregated level, and specifically amongst the top portfolio names, underlying delivery remained strong and broadly on track vs. updated and profitability focused forecasts.
The liquid assets of the Group, defined as cash and bank deposits, amounted to USD 8.6 mln on December 31, 2022 (YE21: 11.1). The Company also has placements in money market funds and bonds, as part of its liquidity management operations. As of December 31, 2022, the liquidity placements are valued at USD 39.9 mln (YE21: 50.6).
The parent company, VEF AB (publ), is the holding company of the Group. The net result for FY22 was SEK 24.0 mln (FY21: 155.3). VEF AB (publ) is the parent of four wholly owned subsidiaries; VEF Cyprus Limited, VEF Fintech Ireland Limited, VEF Service AB (under liquidation) and VEF UK Ltd. VEF AB (publ) is the direct shareholder of three portfolio companies (BlackBuck, Juspay and Rupeek).
Following what was a difficult window for global financial markets in 1H22, 3Q22 showcased a mixed but on average positive quarter for publicly traded fintech stocks. However, during 4Q22 global equity markets experienced a new sell-off approaching the end of the quarter. The global fintech indices (a basket of publicly traded fintech benchmark stocks) that VEF is tracking experienced a 58% decrease on average during the year, while our key portfolio currencies were essentially stable during 4Q22.
Markets remain in favour of profitable stocks compared to growth-oriented assets. Inflation levels remain a challenge in many geographies, while Brazil, specifically, saw inflation consistently coming down over the course of 2H22. Interest rate hikes are very real for the most part, creating a low visibility and a risk-off mode environment. During the quarter VEF has traded at a deep discount to the latest reported NAV, similar to many global peers and other listed fintech stocks. VEF's financial position remains comfortable with a solid balance sheet and a USD 48.5 mln cash position at the end of the quarter, expected to be more than sufficient to support current portfolio over the coming twelve-months period. Importantly, the largest companies in our portfolio remain well funded following recent capital raises during the year, and we forecast the majority of our portfolio to continue growing at healthy levels, albeit at a somewhat slower pace to extend runway and improve financial flexibility. The negative impact on our portfolio is for the most part market-related in the short to medium term, affecting the respective valuations which may impact the ability to raise additional capital further on. Across the board, our portfolio companies have launched cost saving initiatives to extend runway and have plans in place to get to break even with the current funding levels.
VEF has one equity holding (REVO), in addition to liquidity placements (Tinkoff bonds) with direct or partial exposure to Russia, which was equivalent to 2.3% of YE21 NAV.
VEF wrote down the holdings in REVO and Tinkoff bonds to zero in 1Q22. As the situation in Russia remains highly uncertain, the valuations are kept unchanged at zero at the end of the year. Nevertheless, Tinkoff has honoured coupon payments and has followed through with the quarterly payments as planned during 2022.
| Financial income and expenses |
|---|
| Expressed in USD thousands | Note | FY 2022 | FY 2021 | 4Q 2022 | 4Q 2021 |
|---|---|---|---|---|---|
| Result from financial assets at fair value through profit or loss | 4 | -369,936 | 284,574 | -56,184 | 210,696 |
| Coupon income | 410 | 388 | 117 | 96 | |
| Other income | 193 | 8 | 14 | – | |
| Administrative and operating expenses | -7,404 | -8,944 | -1,277 | -2,714 | |
| Operating result | -376,737 | 276,026 | -57,330 | 208,078 | |
| Financial income and expenses | |||||
| Interest income | 21 | 63 | 21 | 1 | |
| Interest expense | -3,009 | -6 | -1,224 | -6 | |
| Currency exchange gains/losses, net | 2,397 | -547 | -2,983 | -75 | |
| Net financial items | -591 | -490 | -4,186 | -80 | |
| Result before tax | -377,328 | 275,536 | -61,516 | 207,998 | |
| Taxation | -31 | -23 | – | -9 | |
| Net result for the period | -377,359 | 275,513 | -61,516 | 207,989 | |
| Earnings per share, USD | -0.36 | 0.30 | -0.06 | 0.22 | |
| Diluted earnings per share, USD | -0.36 | 0.30 | -0.06 | 0.22 | |
| Other comprehensive income for the period: |
|---|
| Items that may be classified subsequently to profit or loss: |
| Expressed in USD thousands | FY 2022 | FY 2021 | 4Q 2022 | 4Q 2021 |
|---|---|---|---|---|
| Net result for the period | -377,359 | 275,513 | -61,516 | 207,989 |
| Other comprehensive income for the period: | ||||
| Items that may be classified subsequently to profit or loss: | ||||
| Currency translation differences | – | -5 | – | – |
| Total other comprehensive income for the period | – | -5 | – | – |
| Total comprehensive income for the period | -377,359 | 275,508 | -61,516 | 207,989 |
Total comprehensive income for the periods above is entirely attributable to the equity holders of the Company.
| Expressed in USD thousands | Note | Dec 31, 2022 | Dec 31, 2021 |
|---|---|---|---|
| NON-CURRENT ASSETS | |||
| Tangible non-current assets | |||
| Property, plant and equipment | 156 | 102 | |
| Total tangible non-current assets | 156 | 102 | |
| Financial non-current assets | |||
| Financial assets at fair value through profit or loss | 4 | ||
| Equity financial assets | 380,800 | 700,311 | |
| Liquid financial assets | 39,877 | 50,642 | |
| Other financial assets | 32 | 27 | |
| Total financial non-current assets | 420,709 | 750,980 | |
| CURRENT ASSETS | |||
| Tax receivables | 64 | 109 | |
| Other current receivables | 449 | 387 | |
| Prepaid expenses and accrued income | 104 | 138 | |
| Cash and cash equivalents | 8,612 | 11,131 | |
| Total current assets | 9,229 | 11,765 | |
| TOTAL ASSETS | 430,094 | 762,847 | |
| SHAREHOLDERS' EQUITY (including net result for the financial period) | 381,831 | 761,728 | |
| NON-CURRENT LIABILITIES | |||
| Long-term debt | 6 | 46,979 | – |
| Total non-current liabilities | 46,979 | – | |
| CURRENT LIABILITIES | |||
| Accounts payable | 76 | 138 | |
| Tax liabilities | – | 51 | |
| Other current liabilities | 241 | 534 | |
| Accrued expenses | 967 | 396 | |
| Total current liabilities | 1,284 | 1,119 | |
| TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES | 430,094 | 762,847 |
| Expressed in USD thousands | Note | Share capital |
Additional paid in capital |
Retained earnings |
Total |
|---|---|---|---|---|---|
| Balance at Jan 1, 2021 | – | – | 388,066 | 388,066 | |
| Net result for the period | – | – | 275,513 | 275,513 | |
| Other comprehensive income for the period | |||||
| Currency translation difference | – | – | -5 | -5 | |
| Total comprehensive income for the period | – | – | 275,508 | 275,508 | |
| Transactions domicile change: | |||||
| - Issuance of share capital | 1,006 | – | -1,006 | – | |
| - Issuance of LTIP 2019 Plan shares | 14 | – | -14 | – | |
| - Issuance of LTIP 2020 Plan shares | 39 | – | -39 | – | |
| Transactions with owners: | |||||
| - Directed rights issue | 238 | 97,120 | – | 97,358 | |
| Value of employee services: | |||||
| - Employee share option scheme | 1 | 94 | 324 | 419 | |
| - Share based long-term incentive program | 10 | 226 | 141 | 377 | |
| Balance at Dec 31, 2021 | 1,308 | 97,440 | 662,980 | 761,728 | |
| Balance at Jan 1, 2022 | 1,308 | 97,440 | 662,980 | 761,728 | |
| Net result for the period | – | – | -377,359 | -377,359 | |
| Other comprehensive income for the period | |||||
| Currency translation difference | – | – | – | – | |
| Total comprehensive income for the period | – | – | -377,359 | -377,359 | |
| Value of employee services: | |||||
| - Employee share option scheme | 7 | – | 12 | – | 12 |
| - Share based long-term incentive program | 8 | 10 | 350 | – | 360 |
| Buyback of own shares | – | -2,910 | – | -2,910 | |
| Balance at Dec 31, 2022 | 1,318 | 94,892 | 285,621 | 381,831 |
| Expressed in USD thousands | Note | Share capital |
Additional paid in capital |
Retained earnings |
Total |
|---|---|---|---|---|---|
| Balance at Jan 1, 2021 | – | – | 388,066 | 388,066 | |
| Net result for the period | – | – | 275,513 | 275,513 | |
| Other comprehensive income for the period | |||||
| Currency translation difference | – | – | -5 | -5 | |
| Total comprehensive income for the period | – | – | 275,508 | 275,508 | |
| Transactions domicile change: | |||||
| - Issuance of share capital | 1,006 | – | -1,006 | – | |
| - Issuance of LTIP 2019 Plan shares | 14 | – | -14 | – | |
| - Issuance of LTIP 2020 Plan shares | 39 | – | -39 | – | |
| Transactions with owners: | |||||
| - Directed rights issue | 238 | 97,120 | – | 97,358 | |
| Value of employee services: | |||||
| - Employee share option scheme | 1 | 94 | 324 | 419 | |
| - Share based long-term incentive program | 10 | 226 | 141 | 377 | |
| Balance at Dec 31, 2021 | 1,308 | 97,440 | 662,980 | 761,728 | |
| Balance at Jan 1, 2022 | 1,308 | 97,440 | 662,980 | 761,728 | |
| Net result for the period | – | – | -377,359 | -377,359 | |
| Other comprehensive income for the period | |||||
| Currency translation difference | – | – | – | – | |
| Total comprehensive income for the period | – | – | -377,359 | -377,359 | |
| Value of employee services: | |||||
| - Employee share option scheme | 7 | – | 12 | – | 12 |
| - Share based long-term incentive program | 8 | 10 | 350 | – | 360 |
| Buyback of own shares | – | -2,910 | – | -2,910 |
| Expressed in USD thousands | FY 2022 | FY 2021 | 4Q 2022 | 4Q 2021 |
|---|---|---|---|---|
| OPERATING ACTIVITIES | ||||
| Result before tax | -377,328 | 275,536 | -61,516 | 207,998 |
| Adjustment for non-cash items: | ||||
| Interest income and expense, net | 2,988 | -57 | 1,203 | 5 |
| Currency exchange gains/-losses, net | -2,397 | 547 | 2,983 | 75 |
| Depreciations | -54 | 109 | -145 | 32 |
| Result from financial assets at fair value through profit or loss | 369,936 | -284,574 | 56,184 | -210,696 |
| Result from long term receivables | – | -27 | – | – |
| Other non-cash items affecting profit or loss | 366 | 350 | 93 | 116 |
| Adjustment for cash items | ||||
| Coupon income | -410 | -388 | -117 | -96 |
| Change in current receivables | -1,727 | -411 | 137 | -154 |
| Change in current liabilities | -52 | 392 | 241 | -492 |
| Adjustments of cash flow in operating activities | -8,678 | -8,523 | -937 | -3,212 |
| Investments in financial assets | -81,660 | -171,132 | -5,000 | -34,420 |
| Sales of financial assets | 42,000 | 86,909 | 6,000 | 37,308 |
| Repayment of short-term loan receivables | – | 2,176 | – | – |
| Coupon income | 410 | 388 | 117 | 96 |
| Interest received | 21 | 63 | 21 | 1 |
| Interest paid | – | -6 | – | -6 |
| Tax paid | -65 | – | -65 | – |
| Net cash flow used in operating activities | -47,972 | -90,125 | 136 | -233 |
| FINANCING ACTIVITIES | ||||
| Proceeds from sustainability bonds | 53,080 | – | – | – |
| Interest paid on sustainability bonds | -1,902 | – | -994 | – |
| Proceeds from directed rights issue, gross | – | 101,557 | – | – |
| Costs in relation to directed rights issue | – | -4,199 | – | -72 |
| Buybacks of own shares | -2,910 | – | -1,651 | – |
| Proceeds from new share issue through employee options | 10 | 409 | – | 85 |
| Net cash flow from financing activities | 48,278 | 97,767 | -2,645 | 13 |
| Change in cash and cash equivalents | 306 | 7,642 | -2,509 | -220 |
| Cash and cash equivalents at the beginning of the period | 11,131 | 4,224 | 10,740 | 11,461 |
| Exchange gains/losses on cash and cash equivalents | -2,825 | -735 | 381 | -110 |
| Cash and cash equivalents at the end of the period | 8,612 | 11,131 | 8,612 | 11,131 |
Alternative Performance Measures (APMs) are financial measures other than financial measures defined or specified by International Financial Reporting Standards (IFRS) and have been issued by ESMA (the European Securities and Markets Authority).
VEF regularly uses alternative performance measures to enhance comparability from period to period and to give deeper information and provide meaningful supplemental information to analysts, investors and other parties.
It is important to know that not all companies calculate alternative performance measures identically, therefore these measurements have limitations and should not be used as a substitute for measures of performance in accordance with IFRS.
Below you find our presentation of the APMs and how we calculate these measures.
| FY 2022 | FY 2021 | |
|---|---|---|
| Net asset value, USD | 381,830,589 | 761,728,416 |
| Exchange rate at balance sheet date, USD/SEK | 10.43 | 9.04 |
| Net asset value/share, USD | 0.37 | 0.73 |
| Net asset value/share, SEK | 3.82 | 6.61 |
| Net asset value, SEK | 3,981,466,381 | 6,884,560,396 |
| Share price, SEK | 2.45 | 6.05 |
| Traded premium/discount(-) to NAV | -35.8% | -8.4% |
| Weighted average number of shares for the financial period 1 | 1,045,052,785 | 905,955,689 |
| Weighted average number of shares for the financial period, fully diluted 1, 2 |
1,045,052,785 | 906,438,372 |
| Number of shares at balance sheet date 1 | 1,041,865,735 | 1,042,289,978 |
| Number of shares at balance sheet date, fully diluted 1, 2 |
1,041,865,735 | 1,042,772,661 |
| 1. Number of shares does not include the 51,985,395 redeemable common shares issued under the 2020, 2021 and 2022 long-term incentive programs as well as the 12,824,243 repurchased shares. |
| Dec 31, 2022 | Dec 31, 2021 | |
|---|---|---|
| Net asset value, USD | 381,830,589 | 761,728,416 |
| Net asset value, SEK | ||
| Net asset value, USD | 381,830,589 | 761,728,416 |
| SEK/USD | 10.43 | 9.04 |
| Net asset value, SEK | 3,981,466,381 | 6,884,560,396 |
| Net asset value/share, USD | ||
| Net asset value, USD | 381,830,589 | 761,728,416 |
| Number of outstanding shares | 1,041,865,735 | 1,042,289,978 |
| Net asset value/share, USD | 0.37 | 0.73 |
| Net asset value/share, SEK | ||
| Net asset value, USD | 381,830,589 | 761,728,416 |
| SEK/USD | 10.43 | 9.04 |
| Net asset value, SEK | 3,981,466,381 | 6,884,560,396 |
| Number of outstanding shares | 1,041,865,735 | 1,042,289,978 |
| Net asset value/share, SEK | 3.82 | 6.61 |
| Premium/discount(–) to NAV | ||
| Net asset value, USD | 381,830,589 | 761,728,416 |
| SEK/USD | 10.43 | 9.04 |
| Net asset value, SEK | 3,981,466,381 | 6,884,560,396 |
| Number of outstanding shares | 1,041,865,735 | 1,042,289,978 |
| Net asset value/share, SEK | 3.82 | 6.61 |
| Share price, SEK | 2.45 | 6.05 |
| Premium/discount(–) to NAV | -35.8% | -8.4% |
Net asset value (NAV), USD
Net value of all assets on the balance sheet, equal to the shareholders' equity.
Net asset value per share, USD Net asset value/share is defined as shareholders' equity divided by total number of outstanding shares.
Net asset value, SEK Net asset value in USD multiplied with the USD/SEK exchange rate at balance sheet date.
Net asset value per share, SEK
Net asset value/share is defined as shareholders' equity divided by total number of outstanding shares multiplied with the USD/SEK exchange rate at balance sheet date.
Traded premium/discount to net asset value
Traded premium/discount to NAV is defined as the share price divided to the net asset value/share.
Diluted basis considers the total number of outstanding common shares as well as the shares that could be claimed through the conversion of outstanding share options and Series C shares under the long-term incentive programs when the program's conditions has been fulfilled and the shares have not yet been converted.
Total book value of financial assets held at fair value through profit and loss.
Earnings/share is defined as the result for the period divided by average weighted number of shares for the period.
Diluted earnings/share is defined as the result for the period divided by average number of shares for the period fully diluted.
| Expressed in SEK thousands | |||
|---|---|---|---|
| Expressed in SEK thousands | FY 2022 | May 28– Dec 31, 2021 |
4Q 2022 | 4Q 2021 |
|---|---|---|---|---|
| Result from financial assets at fair value through profit or loss | 95,664 | 184,417 | -97,935 | 138,344 |
| Coupon income | 4,174 | 1,716 | 1,199 | 880 |
| Other income | 156 | – | 17 | – |
| Administrative and operating expenses | -49,045 | -28,639 | -8,471 | -15,412 |
| Operating result | 50,949 | 157,494 | -105,190 | 123,812 |
| Financial income and expenses | ||||
| Interest income | 216 | – | 216 | – |
| Interest expense | -31,941 | – | -12,972 | – |
| Currency exchange gains/losses, net | 4,745 | -2,187 | -583 | 2,801 |
| Net financial items | -26,980 | -2,187 | -13,339 | 2,801 |
| Result before tax | 23,969 | 155,307 | -118,529 | 126,613 |
| Taxation | – | – | – | – |
| Net result for the period | 23,969 | 155,307 | -118,529 | 126,613 |
The Parent Company have no items to account for as other comprehensive income and therefore the net result for the period is equal to the total comprehensive income for the period.
| Expressed in SEK thousands | Note | Dec 31, 2022 | Dec 31, 2021 |
|---|---|---|---|
| NON-CURRENT ASSETS | |||
| Financial non-current assets | |||
| Shares in subsidiaries | 2,400,800 | 2,027,853 | |
| Financial assets at fair value through profit or loss | |||
| Equity financial assets | 725,327 | 592,653 | |
| Liquid financial assets | 415,811 | 457,709 | |
| Other financial assets | 50 | 244 | |
| Total financial non-current assets | 3,541,988 | 3,078,459 | |
| CURRENT ASSETS | |||
| Tax receivables | 245 | 102 | |
| Other current receivables | 4,310 | 3,102 | |
| Other current receivables, Group | 9,746 | 11,028 | |
| Prepaid expenses and accrued income | 956 | 1,245 | |
| Cash and cash equivalents | 74,592 | 46,011 | |
| Total current assets | 89,849 | 61,488 | |
| TOTAL ASSETS | 3,631,837 | 3,139,947 | |
| SHAREHOLDERS' EQUITY (including net result for the financial period) | 5 | 3,128,670 | 3,132,572 |
| NON-CURRENT LIABILITIES | |||
| Long-term debt | 6 | 488,750 | – |
| Total non-current liabilities | 488,750 | – | |
| CURRENT LIABILITIES | |||
| Accounts payable | 649 | 995 | |
| Other current liabilities, Group | 2,442 | 2,744 | |
| Other current liabilities | 1,463 | 588 | |
| Accrued expenses | 9,863 | 3,048 | |
| Total current liabilities | 14,417 | 7,375 | |
| TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES | 3,631,837 | 3,139,947 |
| of changes in | equity |
|---|---|
| Balance at Dec 31, 2021 | 10,963 | 849,376 | 2,272,233 | 3,132,572 | |
|---|---|---|---|---|---|
| - Share based long-term incentive program | 83 | 2,011 | – | 2,094 | |
| - Employee share option scheme | 5 | 811 | – | 816 | |
| Value of employee services: | |||||
| - Proceeds from directed rights issue, net | 2,073 | 846,554 | – | 848,627 | |
| Transactions with owners: | |||||
| - Shareholders contribution | – | – | 2,116,926* | 2,116,926* | |
| - Issuance of LTIP 2020 Plan shares | 333 | – | – | 333 | |
| - Issuance of LTIP 2019 Plan shares | 124 | – | – | 124 | |
| - Issuance of share capital | 8,345 | – | – | 8,345 | |
| Transactions domicile change: | |||||
| Net result for the period | – | – | 155,307 | 155,307 | |
| Balance at May 28, 2021 | – | – | – | – | |
| Expressed in SEK thousands | Note | Share capital |
Additional paid in capital |
Retained earnings |
Total |
| Expressed in SEK thousands | Note | capital |
|---|---|---|
| Transactions domicile change: | ||
| Transactions with owners: | ||
| Value of employee services: | ||
| Other comprehensive income for the period | ||
| Value of employee services: | ||
| Balance at Jan 1, 2022 | 10,963 | 849,376 | 2,272,233 | 3,132,572 | |
|---|---|---|---|---|---|
| Net result for the period | – | – | 23,969 | 23,969 | |
| Other comprehensive income for the period | |||||
| Currency translation difference | – | – | – | – | |
| Total comprehensive income for the period | – | – | 23,969 | 23,969 | |
| Value of employee services: | |||||
| - Employee share option scheme | 7 | – | 122 | – | 122 |
| - Share based long-term incentive program | 8 | 104 | 3,590 | – | 3,694 |
| Buyback of own shares | – | -31,687 | – | -31,687 | |
| Balance at Dec 31, 2022 | 11,067 | 821,401 | 2,296,202 | 3,128,670 |
* Transfer of all VEF Ltd's assets to VEF AB (publ) due to the redomestication from Bermuda to Sweden.
(Expressed in USD thousand unless indicated otherwise)
VEF AB (publ) was incorporated as a shelf company on December 7, 2020 but changed name to VEF AB (publ) and became active on May 28, 2021. The registered office is at Mäster Samuelsgatan 1, 111 44 Stockholm, Sweden. The common shares of VEF AB (publ) are listed on Nasdaq Stockholm Main Market with the ticker VEFAB. The common shares of VEF AB (publ) replaced the Swedish Depository Receipts representing shares in VEF Ltd. With effect as from July 5, 2021, in connection with the transfer of domicile of the group from Bermuda to Sweden.
As of December 31, 2022, the VEF Group consists of the Swedish Parent Company VEF AB (publ) and four wholly owned subsidiaries; VEF Cyprus Limited, VEF Fintech Ireland Limited, VEF Service AB (under liquidation), and VEF UK Ltd. VEF Cyprus Limited act as the main investment vehicle for the group, holding fourteen of seventeen investments at balance date. VEF AB (publ) holds the remaining three (BlackBuck, Juspay and Rupeek) and act as a service company, together with VEF Fintech Ireland Limited and VEF UK Ltd, providing business and investment support services to the Group.
The financial year is January 1–December 31.
The Parent Company VEF AB (publ) is a Swedish limited liability company, incorporated in Sweden and operating under Swedish law. VEF AB (publ) is the holding company of the Group and directly owns all the companies in the Group. The net result for FY22 was SEK 24.0 mln (FY21: 155.3). VEF AB (publ) was incorporated on December 7, 2020, and became active on May 28, 2021. The parent company has four employees per December 31, 2022.
This interim report has, for the Group, been prepared in accordance with IAS 34 Interim Financial Reporting and the Swedish Annual Accounts Act. The financial reporting for the Parent Company has been prepared in accordance with the Swedish Annual Accounts Act and RFR 2 Accounting for legal entities, issued by the Swedish Financial Reporting Board.
Under Swedish company regulations it is not allowed to report the Parent Company results in any other currency than SEK or EUR and consequently the Parent Company's financial information is reported in SEK and not the Group's reporting currency of USD.
The accounting principles in the 2021 Annual Report sets out the principles for the Group and the Parent company.
For a detailed account of risks associated with investing in VEF and VEF's business, please see the 2021 Annual Report, Note 2.
Related party transactions for the period are of the same character as described in the 2021 Annual Report. During the period VEF has recognized the following related party transactions:
| Operating expenses | Current liabilities | ||||
|---|---|---|---|---|---|
| FY22 | FY21 | YE22 | YE21 | ||
| Key management and Board of Directors ¹ | 2,887 | 3,984 | – | – |
The fair value of financial instruments traded in active markets is based on quoted market prices at the balance sheet date. A market is regarded as active if quoted prices are readily and regularly available from an exchange, dealer, broker, industry company, pricing service, or regulatory agency, and those prices represent actual and regularly occurring market transactions on an arm's length basis. The quoted market price used for financial assets held by the Group is the current bid price. These instruments are included in Level 1. The fair value of financial instruments that are not traded in an active market is determined by using valuation techniques. These valuation techniques maximize the use of observable market data where it is available and rely as little as possible on entity specific estimates. If all significant inputs required to determine the fair value of an instrument are observable, the instrument is included in Level 2. If one or more of the significant inputs is not based on observable market data, the instrument is included in Level 3.
Investments in assets that are not traded on any market will be held at fair value determined by recent transactions made at prevailing market conditions or different valuation models depending on the characteristics of the company as well as the nature and risks of the investment. These different techniques may include discounted cash flow valuation (DCF), exit-multiple valuation also referred to as leveraged buyout (LBO) valuation, asset-based valuation as well as forward looking multiples valuation based on comparable traded companies (peer companies). Usually, transaction-based valuations are kept unchanged for a period of twelve months unless there is cause for a significant change in valuation. After twelve months, the fair value for non-traded assets will normally be derived through any of the models described above.
The validity of valuations based on a transaction is inevitably eroded over time, since the price at which the investment was made reflects the conditions that existed on the transaction date. At each reporting date, possible changes or events subsequent to the relevant transaction are assessed and if this assessment implies a change in the investment's fair value, the valuation is adjusted accordingly. The transaction-based valuations are also frequently assessed using multiples of comparable traded companies for each unlisted investment or other valuation models when warranted.
VEF follows a structured process in assessing the valuation of its unlisted investments. VEF evaluates company specific and external data relating to each specific investment on an ongoing basis. The data is then assessed at quarterly valuation meetings by senior management. If internal or external factors are deemed to be significant, further assessment is undertaken and the specific investment is revalued to the best fair value estimate. Revaluations are first reviewed by the Audit Committee and later approved by the Board of Directors in connection with the Company's financial reports.
The fair value of financial instruments is measured by level of the following fair value measurement hierarchy:
• Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either
• Level 3 – Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs).
Investments are moved between levels in the fair value hierarchy when the management finds the best suitable valuation technique has changed and that the current applied technique results in a new classification in the fair value hierarchy compared to the prior period.
As per December 31, 2022, VEF has a liquidity management portfolio of listed corporate bonds and money market funds that are classified as Level 1 investments.
The investments in Creditas, Konfío, TransferGo, BlackBuck, Nibo, Magnetis, JUMO, minu, Finja and REVO are classified as Level 3 investments. The remaining portfolio companies are classified as Level 2 investments. During the year, Creditas, Konfío, TransferGo, BlackBuck, Magnetis, JUMO, minu and Finja have been transferred from Level 2 to Level 3. No holdings have been transferred from Level 3 to Level 2.
| 2022 | 2021 | |
|---|---|---|
| Opening balance Jan 1 | 25,794 | 158,181 |
| Transfers from Level 2 to Level 31 | 605,712 | – |
| Transfers from Level 3 to Level 21 | – | -128,071 |
| Change in fair value | -362,292 | -4,316 |
| Closing balance Dec 31 | 269,214 | 25,794 |
| Level 1 | Level 2 | Level 3 | Total balance | |
|---|---|---|---|---|
| Financial assets at fair value through profit or loss | 39,877 | – | – | 39,877 |
| of which: | ||||
| Liquidity placements | 39,877 | – | – | 39,877 |
| Shares | – | 111,586 | 251,085 | 362,671 |
| Convertible and SAFE notes | – | – | 18,129 | 18,129 |
| Total assets | 39,877 | 111,586 | 269,214 | 420,677 |
| Level 1 | Level 2 | Level 3 | Total balance | |
|---|---|---|---|---|
| Financial assets at fair value through profit or loss | 50,642 | 674,517 | 25,794 | 750,953 |
| of which: | ||||
| Liquidity placements | 50,642 | – | – | 50,642 |
| Shares | – | 649,012 | 24,434 | 673,446 |
| Convertible and SAFE notes | – | 25,505 | 1,360 | 26,865 |
| Total assets | 50,642 | 674,517 | 25,794 | 750,953 |
| Company | Valuation method | Date latest transaction |
|---|---|---|
| Abhi | Latest transaction | 2Q22 |
| FinanZero | Latest transaction | 2Q22 |
| Gringo | Latest transaction | 1Q22 |
| Juspay | Latest transaction | 2Q22 |
| Mahaana | Latest transaction | 3Q22 |
| Rupeek | Latest transaction | 4Q22 |
| Solfácil | Latest transaction | 2Q22 |
Holdings classified as Level 2 investments are valued based on the latest transaction in the company, on market terms. The validity of valuations based on a transaction is inevitably eroded over time, since the price at which the investment was made reflects the conditions that existed on the transaction date. At each reporting date, possible changes or events subsequent to the relevant transaction are assessed and if this assessment implies a change in the investment's fair value, the valuation is adjusted accordingly. The transaction-based valuations are frequently assessed using multiples of comparable traded companies for each unlisted investment or other valuation models. When transaction-based valuations of unlisted holdings are used, no material event is deemed to have occurred in the specific portfolio company that would suggest that the transaction-based value is no longer valid. During 4Q22, key portfolio currencies essentially remained flat. The holdings valued on the basis of the latest transactions all demonstrate strong revenue growth profiles and are set to deliver growth broadly in line with their respective business plans on which the latest transaction was based.
In 4Q22, we use the calibration methodology in our portfolio valuation process. The calibration methodology specifically helps us calibrating valuations of companies with recently closed priced investment rounds and where the implied valuation multiple has moved significantly out of sync with our pre-determined comp group based of a sharp decline in public markets. The methodology is a fair tool for reflecting dramatically changing market conditions ahead of moving to full mark-to-model.
Inputs used for the valuation include risk adjusted revenue forecasts, currency moves and the implied revenue multiple paid at the time of the latest transaction relative to a relevant peer group adjusted for market moves in the same peer group as of December 31, 2022. At the end of 2022, one company, Creditas, was valued using the calibration methodology.
Konfío, TransferGo, BlackBuck, Nibo, JUMO, minu and Finja are all valued on the basis of a twelve-months forward looking revenue multiple while Magnetis is based on a relative multiple to AUM. REVO's valuation model, in light of the geo-political situation in Russia, was assigned a liquidity discount of 100% in 1Q22, bringing the fair value to zero which remains in 4Q22. Inputs used for each valuation include risk adjusted revenue- and earnings forecasts, local currency moves and listed peer group revenue multiples as of December 31, 2022.
The difference in fair value change between the portfolio companies is dependent on relative revenue forecasts in each company as well as moves in the relevant peer group and moving exchange rates. Peers used in the 4Q22 peer set include a mix of listed emerging- and developed market companies representing accounting SaaS and BNPL companies, digitally focused wealth managers, fast growth payments companies and a range of Latin American fintech companies. The NTM multiples across the different peer groups per company and valuation range from 0.8x to 11.6x NTM revenues. As a standard process, the median of each group is used, and in applicable cases VEF will adjust the resulting multiple based on prevailing local market conditions, sector and company specific factors, applying discounts or premiums to reflect the fair value of the company.
Below table summarizes the sensitivity of the assets value to changes in the underlying multiple used for the valuation.
Sensitivity analysis of valuations based on changes in peer group multiples used
| Company | Valuation method | Peer group range | -15% | -10% | -5% | 0% | +5% | +10% | +15% |
|---|---|---|---|---|---|---|---|---|---|
| Creditas | Calibration methodology | 1.0-3.5x | 167,551 | 176,060 | 184,568 | 193,076 | 201,585 | 210,093 | 218,602 |
| Konfío | Revenue multiple | 1.0-3.5x | 35,897 | 37,313 | 38,730 | 40,146 | 41,563 | 42,979 | 44,395 |
| TransferGo Revenue multiple | 1.9-5.1x | 14,165 | 14,892 | 15,620 | 16,347 | 17,074 | 17,801 | 18,529 | |
| BlackBuck Revenue multiple | 5.2x | 5,950 | 6,264 | 6,579 | 6,894 | 7,209 | 7,523 | 7,838 | |
| Nibo | Revenue multiple | 5.6-7.7x | 5,905 | 6,209 | 6,513 | 6,817 | 7,120 | 7,424 | 7,728 |
| Magnetis | AUM multiple | 5.2-74.4% | 2,409 | 2,485 | 2,561 | 2,637 | 2,713 | 2,789 | 2,865 |
| JUMO | Revenue multiple | 2.6-11.0x | 1,950 | 2,074 | 2,198 | 2,322 | 2,445 | 2,569 | 2,693 |
| minu | Revenue multiple | 2.3-5.6x | 472 | 495 | 518 | 541 | 564 | 587 | 611 |
| Finja | Revenue multiple | 0.8-11.6x | 401 | 412 | 423 | 434 | 445 | 457 | 468 |
| Company | Jan 1, 2022 | Investments/ (divestments), net |
Fair value change |
Dec 31, 2022 | Percentage of portfolio |
VEF ownership stake |
|---|---|---|---|---|---|---|
| Creditas | 394,123 | 5,000 | -206,047 | 193,076 | 46.0% | 8.5% |
| Juspay | 42,420 | 4,098 | 953 | 47,471 | 11.3% | 10.2% |
| Konfío | 135,582 | – | -95,436 | 40,146 | 9.5% | 10.3% |
| Solfácil | – | 20,000 | – | 20,000 | 4.8% | 2.6% |
| TransferGo | 29,271 | – | -12,924 | 16,347 | 3.9% | 12.5% |
| Rupeek | 13,152 | 1,873 | 170 | 15,195 | 3.6% | 2.3% |
| Gringo | – | 12,250 | – | 12,250 | 2.9% | 10.2% |
| FinanZero | 11,882 | 991 | -4,788 | 8,085 | 1.9% | 19.0% |
| Abhi | 1,350 | 448 | 5,787 | 7,585 | 1.8% | 11.5% |
| BlackBuck | 10,000 | – | -3,106 | 6,894 | 1.6% | 1.0% |
| Nibo | 12,560 | – | -5,743 | 6,817 | 1.6% | 20.1% |
| Magnetis | 10,526 | 1,000 | -8,889 | 2,637 | 0.6% | 16.8% |
| JUMO | 18,409 | – | -16,087 | 2,322 | 0.6% | 4.5% |
| Mahaana | – | 1,000 | – | 1,000 | 0.2% | 13.8% |
| minu | 450 | – | 91 | 541 | 0.1% | 1.2% |
| Finja | 7,351 | – | -6,917 | 434 | 0.1% | 21.2% |
| REVO | 13,235 | – | -13,235 | – | 0.0% | 23.0% |
| Liquidity investments | 50,642 | -7,000 | -3,765 | 39,877 | 9.5% | – |
| Total | 750,953 | 39,660 | -369,936 | 420,677 | 100% |
Per December 31, 2022, a total of 1,000,000 options are outstanding. None to the Managing Director and 1,000,000 to other employees.
| Option grant date | May 16, 2018 | Dec 17, 2019 |
|---|---|---|
| Maturity date | Aug 16, 2023 | Dec 17, 2024 |
| Option price at grant date, SEK | 0.41 | 0.34 |
| Share price at grant date, SEK | 1.97 | 2.95 |
| Exercise price, SEK | 2.35 | 3.69 |
| Volatility | 29.90% | 22.80% |
| Risk free interest rate | -0.13% | -0.29% |
| No. of options granted | 500,000 | 500,000 |
For more information on the option plan, please see Note 8 in the 2021 Annual Report.
During 2Q22, VEF issued sustainability bonds of three years, to the amount of SEK 500 mln, within a frame of SEK 1,000 mln. The bonds carry a floating coupon of 3m Stibor + 725 bps with interest paid quarterly. The bonds are due in April 2025. The bonds are trading on the sustainable bond list of Nasdaq Stockholm and the Open Market of the Frankfurt Stock Exchange.
VEF AB (publ)'s share capital per December 31, 2022, is distributed among 1,106,675,373 shares with a par value of SEK 0.01 per share as set out in the table below. Each share of the Company carries one vote. The common shares trade on Nasdaq Stockholm Main Market, Mid Cap-segment.
The convertible shares of Class C 2020, Class C 2021 and Class C 2022 are held by management and key personnel of VEF under the Company's long-term incentive programs. The Class C shares are redeemable pursuant to the terms set out in VEF's articles of association. The 12,400,000 Class C 2019 shares were converted into common shares on July 15, 2022 increasing the common shares to 1,054,689,978.
As per December 31, 2022, VEF holds 12,824,243 repurchased shares in accordance with the buyback program based on the mandate from the annual general meeting of the Company on May 10, 2022.
| Share class | Number of shares | Number of votes Share capital (SEK) | |
|---|---|---|---|
| Common shares1 | 1,054,689,978 | 1,054,689,978 | 10,546,899.78 |
| Class C 2020 | 33,250,000 | 33,250,000 | 332,500.00 |
| Class C 2021 | 8,312,500 | 8,312,500 | 83,125.00 |
| Class C 2022 | 10,422,895 | 10,422,895 | 104,228.95 |
| Total | 1,106,675,373 | 1,106,675,373 | 11,066,753.73 |
No significant events after the end of the period.
| LTIP 2020 | LTIP 2021 | LTIP 2022 | |
|---|---|---|---|
| Performance measurement period | Jan 2020–Dec 2024 | Jan 2021–Dec 2025 | Jan 2022–Dec 2026 |
| Vesting period | Nov 2020–Dec 2024 Sept 2021–Dec 2025 Aug 2022–Dec 2024 | ||
| Maximum no of shares, Managing Director | 13,300,000 | 3,325,000 | 3,325,000 |
| Maximum no of shares, others | 19,950,000 | 4,987,500 | 7,097,895 |
| Maximum no of shares, total | 33,250,000 | 8,312,500 | 10,422,895 |
| Maximum dilution | 3.19% | 0.80% | 1.00% |
| Share price on grant date, SEK | 3.14 | 4.34 | 2.306 |
| Share price on grant date, USD | 0.36 | – | – |
| Plan share price on grant date, SEK1 | 0.37 | 0.62 | 0.10 |
| Plan share price on grant date, USD1 | 0.04 | – | – |
| Total employee benefit expense excl. bonuses paid and social taxes (USD mln) |
LTIP 2020 2 | LTIP 2021 2 | LTIP 2022 2 |
| 2022 | 0.20 | 0.13 | 0.01 |
| 2021 | 0.20 | 0.02 | – |
| 2020 | 0.03 | – | – |
| Total accumulated | 0.43 | 0.15 | 0.01 |
There are three running and one completed LTIP programs for management and key personnel in the VEF Group. All three running programs, LTIP 2020, 2021 and 2022 are linked to the long-term performance of both the Company's NAV and of the VEF share price. For more information on the LTIPs, please see Note 8 in the 2021 Annual Report.
The difference in common share price and plan share price derive from that plan share price has been calculated using the Monte Carlo method applying the performance criterias applicable in the terms for the long-term incentive programme and the current share price at grant date.
The total IFRS 2 expense does not include subsidy for acquisition and taxes arisen.
The Board of Directors determined on May 10, 2022, that the development of the Company's NAV and share price over the term of LTIP 2019 (Jan 1, 2019, through Dec 31, 2021), meets the so-called stretch level, whereby the Class C 2019 shares held by the participants were converted on July 15, 2022. A total of 12,400,000 Class C 2019 shares were converted.
The Board has approved a long-term share incentive plan ("LTIP 2022") for eight key employees in the Company. LTIP 2022 is a five-year performance-based incentive program. The objective of LTIP 2022 is to encourage the employees to financially commit to the long-term value growth of VEF, and thereby align their interests with those of the shareholders. VEF has compensated the participants with a cash subsidy for the subscription price and the tax effects arising due to the subsidy of the subscription price and benefit.
The annual general meeting of VEF is planned to take place on Tuesday, May 9, 2023. The annual report will be available on the Company's website (vef.vc) from March 27, 2023.
January 25, 2023
David Nangle Managing Director
This information is information that VEF AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation and the Securities Markets Act. The information was submitted for publication, through the agency of the contact persons set out below, at 2023-01-25 08:00 CET.
For further information, visit vef.vc or contact:
Henrik Stenlund CFO Tel +46 8 545 015 50 Email [email protected]
This report has not been subject to review by the Company's auditors.
The emerging market fintech investor
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