Vef Ab · OMXSTO:VEFAB
Vef Ab — Q3 2021 Earnings Presentation
77 slides from Vef Ab's earnings presentation, Dec 15, 2021
Slide 1: Investor Presentation 3Q 2021
Investor Presentation 3Q 2021 The emerging market fintech investor
Slide 2: Recent highlights
Recent highlights Successful recent capital raise - $102 mln in Aug-21 We successfully raised $102 mln of additional capital to continue investing in our mandate of EM Fintech. It was our biggest raise to date and supported by both our current shareholder base and a host of quality new investor name
Slide 3: Introduction to VEF
1 Introduction to VEF – The Emerging Market Fintech Investor 2 VEF’s Portfolio 3 Investment Opportunities 4 ESG 5 Appendix 3
Slide 4: The emerging market fintech investor
The emerging market fintech investor Riding one of the strongest multi-year secular growth trends in some of the world’s fastest-growing markets Emerging market specialists Fintech expertise Listed investment company • Extensive Emerging Markets investing experience • Deep sector knowledge built thr
Slide 5: Clear investment approach coupled with deep fintech expertise
Clear investment approach coupled with deep fintech expertise Targeted investment approach with a clear mandate … … and deep expertise across the fintech spectrum • Consumer SECTOR • SME CREDIT • Secured We target all lines of financial services inclusive of payments, credit and savings/investments.
Slide 6: A diversified portfolio across scale emerging markets
A diversified portfolio across scale emerging markets VEF has backed entrepreneurs across the emerging world since inception in 2015 Emerging Europe – 5% Brazil – 37% Russia Emerging Europe Africa - 3% Mexico – 25% Pakistan Mexico India Russia – 3% Africa India – 8% Brazil Pakistan – 1% VEF investme
Slide 7: Portfolio commentary
Portfolio commentary VEF portfolio NAV as of 30-Sep-2021 • We have 15 holdings as of 3Q21, diversified by geography, business type and stage of development. Portfolio USD 553.6 mln • In 3Q21, we made one new investment: USD 10 mln in evolution through Blackbuck, India’s largest online trucking platf
Slide 8: Strong track record of investing in benchmark private fintech names across EM
Strong track record of investing in benchmark private fintech names across EM We are now present in one of top 3 private fintech assets each in Brazil, Mexico & India. We have a track record of backing and successfully exiting fintech champions in Russia and Turkey. Current investments in two of Lat
Slide 9: Share price, NAV/share and the premium/discount
Share price, NAV/share and the premium/discount NAV/share & share price development 7,0 Premium/(Discount) to NAV1 50% 6,0 40% 30% 5,0 20% 10% 4,0 0% 3,0 -10% -20% 2,0 -30% -40% 1,0 -50% -60% 0,0 dec-15 jul-16 feb-17 sep-17 apr-18 nov-18 jun-19 jan-20 aug-20 mar-21 okt-21 dec-15 jun-16 dec-16 jun-17
Slide 10: Strong history of value creation since inception
Strong history of value creation since inception Two successful exits in 2019 with IRRs >55%, and NAV per share IRR of 25% Focus Digital Bank Year of investment 2015 Focus Payments Year of investment 2017 Key Key Founded 2007 Amount invested $19 mln Founded 2013 Amount invested $11 mln facts facts K
Slide 11: VEF shareholder structure
VEF shareholder structure Owner Holdings, shares Holding % 1 Ruane, Cunniff & Goldfarb 217,832,109 20.9% 1 Libra Fund 124,198,165 11.9% Fidelity Investments (FMR) 95,139,868 9.1% Swedbank Robur Funds 92,874,245 8.9% 1 Wellington Management 49,585,580 4.8% Fidelity International (FIL) 26,265,135 2.5%
Slide 12: Strong team with significant EM/fintech experience
Strong team with significant EM/fintech experience Alexis Koumoudos David Nangle Henrik Stenlund CIO CEO CFO • Experience: 10 years EM investing and 5 • Experience: 20+ years EM FS Experience: 15+ years years entreprenuer • Renaissance Capital Head of Research and • COO of Pomegranate Investment, VN
Slide 13: VEF's Portfolio
1 Introduction to VEF – The Emerging Market Fintech Investor 2 VEF’s Portfolio 3 Investment Opportunities 4 ESG 5 Appendix 13
Slide 14: VEF portfolio summary
VEF portfolio summary Invested amount Sep’21 fair value Company Country Segment Inv. date Ownership % (USD mln) (USD mln) Brazil Asset focused Ecosystem Dec-17 8.4% 73.4 169.0 Mexico Diversified FS for Mexican SMBs Jun-18 10.4% 56.5 135.6 Emerging Europe Cross-Border Remittances Jun-16 12.3% 13.9 29
Slide 15: A Selection of VEF's Key Geographies and Portfolio Holdings
2 A Selection of VEF’s Key Geographies and Portfolio Holdings A. Brazil B. Mexico C. India D. Emerging Europe 15
Slide 16: Brazil is the most obvious fintech opportunity globally
Brazil is the most obvious fintech opportunity globally A SCALE MARKET OPPORTUNITY With a population of over 200 million people, Brazil is one of the world’s largest economies, and the kind of scale emerging market we like to invest in. ONE OF THE MOST ‘ONLINE’ MARKETS IN THE WORLD Brazil is one of
Slide 17: Brazil constitutes 37% of VEF's portfolio
Brazil constitutes 37% of VEF’s portfolio with five active investments Remaining portfolio 63,0% 30,5% 37% 2,2% 2,2% 1,9% 0,2% % of 3Q21 total portfolio NAV 17
Slide 18: Creditas
Creditas Brazil’s leading digital-first secured lending platform Focus Asset Focused Ecosystem Fair value USD 169.0 mln Founded 2012 Investment USD 73.4 mln Key facts Key region Brazil Ownership stake 8.4% Share of NAV: 30.5% Year of investment 2017 Creditas in brief Creditas in figures Creditas is
Slide 19: Creditas' strong business model is reflected in its financial metrics
Creditas Creditas’ strong business model is reflected well in its financial metrics 3 500 CAGR 300 Recurring revenue Upfront revenue 300 2 921 257 3 000 YTD 21 YoY 181% 250 CAGR 250 CY17-20 142% 170 2 500 YTD 21 YoY 138% 124 2 015 200 CY17-20 139% 200 2 000 104 Credit 1 545 Revenue 150 80 71 81 150
Slide 20: Creditas, product suite rollout and value creation history
Creditas, product suite rollout and value creation history With a loan book now standing at BRL 2.9b and significant strides in the ibuyer space YTD, we see considerable upside in Creditas in the coming months 3Q20 4Q20 1H21 3Q21 Creditas acquires Creditas acquires Creditas partners with Creditas $2
Slide 21: A Selection of VEF's Key Geographies and Portfolio Holdings
2 A Selection of VEF’s Key Geographies and Portfolio Holdings A. Brazil B. Mexico C. India D. Emerging Europe 21
Slide 22: Mexico is a scale market with a large underserved SME and consumer segment
Mexico is a scale market with a large underserved SME and consumer VEF Investments segment SME Credit and Financial Services • 7 million SMEs in Mexico, <10% of which have access to financing SME and Financial Services Mexico constitutes 25% of VEF’s portfolio • Banks focus predominantly on serving
Slide 23: Konfio
Konfio Digital banking and software tools for Mexico’s SMEs Focus Diversified financial services for Mexican SMEs Fair value USD 135.6 mln Founded 2014 Investment USD 56.5 mln Key facts Key region Mexico Ownership stake 10.4% Share of NAV: 24.5% Year of investment 2018 Revenue: 146% CAGR 2017-2020 G
Slide 24: Konfio
Konfio Data-driven financial services 24
Slide 25: Konfio product suite expansion & value creation history
Konfío product suite expansion & value creation history Rolling out a three-pillar strategy of lending, SaaS and payments to serve Mexican SMEs 3Q20 4Q20 1H21 3Q21 Konfío acquires ERP and Konfío becomes Mexico’s 4th VEF raises accounting software Konfío raises $125 mln Series E VEF share price and N
Slide 26: A Selection of VEF's Key Geographies and Portfolio Holdings
2 A Selection of VEF’s Key Geographies and Portfolio Holdings A. Brazil B. Mexico C. India D. Emerging Europe 26
Slide 27: India is an exciting market with an evolved fintech ecosystem
VEF India is an exciting market with an evolved fintech ecosystem Investments Payments • A scale market with 2nd largest population and one of the largest banked populations in the world. High smartphone penetration, digital adoption and data usage has resulted in high Payments adoption of fintech.
Slide 28: Juspay
Juspay India’s leading mobile payments platform for online merchants Focus Mobile Payments Fair value USD 28.7 mln Founded 2012 Investment USD 13.0 mln Key facts Key region India Ownership stake 9.9% Share of NAV: 5.2% Year of investment 2020 Juspay in figures Juspay is India’s leading mobile paymen
Slide 29: Juspay
Juspay Digital payments are witnessing exponential growth in India and Juspay is well positioned to capitalize on the huge opportunity UPI is fast becoming the most favored method of digital payment…. Juspay has achieved ~1.2x scale compared to next four peers combined Value and volume of UPI transa
Slide 30: Rupeek
Rupeek India’s fastest-growing asset-backed digital lending platform Focus Secured Lending Platform Fair value USD 7.0 mln Founded 2015 Investment USD 7.0 mln Key facts Key region India Ownership stake 1.4% Share of NAV: 1.3% Year of investment 2021 Indian gold loan industry and Rupeek in figures Ru
Slide 31: Blackbuck
Blackbuck – 3rd investment in India and 1st in embedded fintech India’s largest online trucking platform Focus Online trucking platform Fair value USD 10 mln Founded 2015 Investment USD 10 mln Key facts Key region India Ownership stake 1.0% Share of NAV: 1.8% Year of investment 2021 Blackbuck in fig
Slide 32: A Selection of VEF's Key Geographies and Portfolio Holdings
2 A Selection of VEF’s Key Geographies and Portfolio Holdings A. Brazil B. Mexico C. India D. Emerging Europe 32
Slide 33: Emerging Europe
VEF Emerging Europe Investments Cross-Border Remittances Emerging Europe constitutes 5% of VEF’s ✓ Global remittances totaled USD +700 bln in 2020 (World Bank) and continues to grow portfolio ✓ The average cost of making a cross-border remittance in 4Q20 was 6.5% ✓ Growing share of cross-border remi
Slide 34: TransferGo
TransferGo A leading digital cross-border remittance provider in Europe Focus Cross Border Remittances Fair value USD 29.2 mln Founded 2012 Investment USD 13.9 mln Key facts Key region Europe Ownership stake 12.3% Share of NAV: 5.3% Year of investment 2016 TransferGo in figures TransferGo is a low-c
Slide 35: TransferGo
TransferGo TransferGo bridges the unmet need for blue-collar migrants to conveniently transfer money abroad TransferGo: The business model in brief Global digital remittance volume is set to increase … “Blue-collar migrants have unique financial needs and they remain underserved” 714 733 750 694 642
Slide 36: TransferGo
TransferGo TransferGo v/s. Wise v/s. Remitly Card-to-card and bank remittances C2C transfers Remittances SME offering Multi-currency account with debit (for immigrants, generally one-way) Product card Remittances-as-a-service SME/ Enterprise offering 743 corridors 1,600 corridors 700 corridors 50 re
Slide 37: Investment Opportunities
1 Introduction to VEF – The Emerging Market Fintech Investor 2 VEF’s Portfolio 3 Investment Opportunities 4 ESG 5 Appendix 37
Slide 38: Investment opportunities
Investment opportunities Three core avenues for capital allocation • Continuously evaluating three core opportunities for investment and shareholder value creation • Investment decisions and prioritization driven by expected IRR from each opportunity FOLLOW-ON INVESTMENTS • Opportunities to invest m
Slide 39: Follow-on investments
Follow-on investments Investing more in portfolio winners, companies we know inside-out, with high conviction on expected IRRs Strong history of follow-ons augmenting shareholder value creation 45 15 Total expected follow-ons of 16 Historic and projected follow-on investments (USD mln) ~$66 mln in 2
Slide 40: Pipeline heating up, but we remain disciplined and selective
Pipeline heating up, but we remain disciplined and selective • Deal flow as healthy as ever with fintech in emerging markets gaining momentum and high profile exits. • Country by country approach to searching for opportunities and teams that we believe will be winners in their space. • Leverage our
Slide 41: VEF investment case
VEF investment case VEF provides unique access to one of the most exciting value creation spaces within emerging markets. NAV continues to reach new highs and a strong basis for continued growth YTD 2021 has started where 2020 left off and we remain encouraged by all we see in our portfolio as we lo
Slide 42: ESG
1 Introduction to VEF – The Emerging Market Fintech Investor 2 VEF’s Portfolio 3 Investment Opportunities 4 ESG 5 Appendix 42
Slide 43: VEF core values – the foundation
VEF sustainability and core values VEF sustainability in brief VEF core values Stewardship Active and responsible shareholder that takes corporate governance very seriously, both within VEF and in portfolio companies Integrity Transparent, open, honest, fair and ethical towards all stakeholders Port
Slide 44: Sustainability strategy
Sustainability strategy VEF’s sustainability strategy Sustainability at VEF An investment decision-making process driven by a strong belief in: Two dimensions of sustainability at VEF: 1 Sustainability as a fundamental part of business VEF as a company and investor 1 • While small today, we recogniz
Slide 45: Investment process backed by a thorough ESG diligence
Investment process backed by a thorough ESG diligence VEF is an active and responsible shareholder, believing in the fundamental importance of integrating ESG considerations into our investment process to create sustainable and long-term value for our investors Investment From sourcing to investment
Slide 46: Supporting the SDGs – social impact
Supporting the SDGs – social impact Our capital positively impact the access to fair and affordable financial services while staying true to our mandate of maximizing return Financial inclusion • Supporter of UN Sustainable Development Goals • Access to financial services for people and small busine
Slide 47: Fintech for financial inclusion – VEF portfolio (1/2)
Fintech for financial inclusion – VEF portfolio (1/2) Most VEF portfolio companies play an important role in the furthering of financial inclusion, by providing: a) services to underserved consumers and SMEs; or b) access to financial services at fair and affordable terms. A VEF benchmark for financ
Slide 48: Fintech for financial inclusion – VEF portfolio (2/2)
Fintech for financial inclusion – VEF portfolio (2/2) Most VEF portfolio companies play an important role in the furthering of financial inclusion, by providing: a) services to underserved consumers and SMEs; or b) access to financial services at fair and affordable terms. Serving underserved popula
Slide 49: ESG: Redomestication and new board member
ESG: Redomestication and new board member Redomestication from Bermuda to Sweden complete Welcoming new board member, Hanna Loikkanen • The redomestication of our • Following her election at our parent company from May AGM, we are delighted Bermuda to Sweden was to welcome Hanna completed in the beg
Slide 50: Appendix
1 Introduction to VEF – The Emerging Market Fintech Investor 2 VEF’s Portfolio 3 Investment Opportunities 4 ESG 5 Appendix 50
Slide 51: Appendix
5 Appendix A. Deal sourcing B. History of value creation C. Governance structure D. Other portfolio holdings 51
Slide 52: Deal sourcing
Deal sourcing Country by country approach to targeting opportunities TOP-DOWN DRIVERS Capital markets Macroeconomics Tech adoption Regulation + + Cultural aspects + + Funding sources Access to talent Unit Economics Behaviour Regulatory drivers + + Exit environment Demographics IDENTIFY SEGMENTS OF F
Slide 53: Global fintech lens with trusted local partners
Global fintech lens with trusted local partners Strong value proposition: global lens + deep sector expertise + strong local partner support + local knowledge ….and leverages a strong network of local VC partners and co-investors providing a superior value proposition. ` COMMENTS • Each Emerging Mar
Slide 54: Rigorous investment process
Rigorous investment process We identify and track investees for a long time before investing DURATION COUNTRY-BY-COUNTRY APPROACH TO IDENTIFYING OPPORTUNITIES 1. Use top-down drivers and bottom-up mapping to identify attractive opportunities and teams Ongoing INVEST TIME AND BUILD A RAPPORT 3 months
Slide 55: Appendix
5 Appendix A. Deal sourcing B. History of value creation C. Governance structure D. Other portfolio holdings 55
Slide 56: Strong back drop for value accretive exits within the EM fintech space
Strong back drop for value accretive exits within the EM fintech space Growing wave of fintech M&A and exits Recent EM Fintech exits Evolution of Global Fintech M&A IPOs 993 972 $300 905 916 1 000 872 Company Valuation Offer size Year $250 900 $200 732 800 $33 bln $2.4 bln 2020 $150 700 234 241 $100
Slide 57: Appendix
5 Appendix A. Deal sourcing B. History of value creation C. Governance structure D. Other portfolio holdings 57
Slide 58: Diverse engaged Board with broad-based value-added experience
Diverse engaged Board with broad-based value-added experience Lars O Grönstedt Ranjan Tandon Chairman of the Board Board Member Experience: Experience: • CEO of Handelsbanken between 2001–2006, and Chairman of the • Founder and Chairman, Libra Advisors Board of Handelsbanken between 2006–2008 • Seve
Slide 59: Appendix
5 Appendix A. Deal sourcing B. History of value creation C. Governance structure D. Other portfolio holdings 59
Slide 60: VEF portfolio summary
VEF portfolio summary Invested amount Sep’21 fair value Company Country Segment Inv. date Ownership % (USD mln) (USD mln) Brazil Asset focused Ecosystem Dec-17 8.4% 73.4 169.0 Mexico Diversified FS for Mexican SMBs Jun-18 10.4% 56.5 135.6 Emerging Europe Cross-Border Remittances Jun-16 12.3% 13.9 29
Slide 61: Russia – A scale market and global leader in digital banking
VEF Russia – A scale market and global leader in digital banking Investments Listed players Consumer Credit • Russia is a scale market with a population of 145 mln people and high levels of fintech adoption, ranking number 3 globally at 82% • The consumer credit market has grown rapidly in recent ye
Slide 62: Revo
Revo Leading buy now pay later player in the Russian market Focus Merchant Payments & Consumer Credit Fair value USD 13.8 mln Founded 2013 Investment USD 6.7 mln Key facts Key region Russia / CEE Ownership stake 23.0% Share of NAV: 2.5% Year of investment 2015 The Afterpay of Russia/CEE, Revo REVO p
Slide 63: Brazil constitutes 37% of VEF's portfolio
Brazil constitutes 37% of VEF’s portfolio with five active investments Remaining portfolio 63,0% 30,5% 37% 2,2% 2,2% 1,9% 0,2% % of 3Q21 total portfolio NAV 63
Slide 64: Nibo
Nibo Brazil’s leading accounting SaaS provider for SMEs and accountants Focus Accounting SaaS provider for SMEs & Accountants Fair value USD 11.9 mln Founded 2012 Investment USD 6.5 mln Key facts Key region Brazil Ownership stake 20.1% Share of NAV: 2.2% Year of investment 2017 Nibo is the leading a
Slide 65: Nibo vs Fortnox – A VEF investment case
Nibo Nibo vs Fortnox – A VEF investment case Brazil v/s. Sweden Brazil’s scale relative to Sweden GDP $ 1,434 bln $ 531 bln 3x Population 210 mln 10 mln 20x Total addressable SMEs 10 mln 1.2 mln 5x Total addressable accountancies 80,000 23,500 3x Nibo v/s. Fortnox Total SME customers 330,000 385,000
Slide 66: FinanZero
FinanZero Digital marketplace for consumer loans in Brazil Focus Consumer Loan Marketplace Fair value USD 12.3 mln Founded 2016 Investment USD 4.2 mln Key facts Key region Brazil Ownership stake 18.4% Share of NAV: 2.2% Year of investment 2016 FinanZero in figures FinanZero is a pioneering digital m
Slide 67: FinanZero
FinanZero Digital marketplace for consumer loans in Brazil FinaZero: Business model in brief Lessons from the Swedish online broker market FinanZero to pocket up to 14% commission with no balance sheet risk Commissions are set to increase ‒ The inherent lock-in effects of the loan broking model make
Slide 68: Magnetis
Magnetis A digital investment advisor Focus Digital Investment Advisor Fair value USD 10.5 mln Founded 2015 Investment USD 5.7 mln Key facts Key region Brazil Ownership stake 17.5% Share of NAV: 1.9% Year of investment 2017 Magnetis is a digital investment advisor in Brazil, democratizing access to
Slide 69: Mexico is a scale market with a large underserved SME and consumer segment
Mexico is a scale market with a large underserved SME and consumer VEF Investments segment SME Credit and Financial Services • 7 million SMEs in Mexico, <10% of which have access to financing SME and Financial Services Mexico constitutes 25% of VEF’s portfolio • Banks focus predominantly on serving
Slide 70: Minu
Minu Mexico’s leading employee financial wellness company and the market leader for salary on demand Focus Salary on demand Fair value USD 0.5 mln Founded 2019 Investment USD 0.5 mln Key facts Key region Mexico Ownership stake 1.2% Share of NAV: 0.1% Year of investment 2021 Minu is the market leader
Slide 71: Africa
VEF Africa VEF Investments Investment Digital Consumer Financial Services • Severely underbanked population, one of the lowest banked regions globally Africa constitutes 3% of VEF’s portfolio • Lack of access impossible to address with branches / traditional banking model • Strong penetration of mob
Slide 72: Jumo
Jumo One of the largest and fastest money marketplaces in emerging markets Focus Banking as a Service Fair value USD 18.4 mln Founded 2014 Investment USD 14.6 mln Key facts Key region Pan-Africa, Asia Ownership stake 4.8% Share of NAV: 3.3% Year of investment 2015 JUMO is a full technology stack for
Slide 73: Pakistan
Pakistan VEF Investments Mobile Wallet and Credit • World’s sixth most populous country with 130 million mobile users but large unbanked population (only ~20% of Mobile Wallet and Credit adults have bank accounts) where as little as 2% of adults Pakistan constitutes 1% of VEF’s portfolio and 7% of S
Slide 74: Finja
Finja A leading digital lending platform and integrated payments ecosystem in Pakistan Focus Digital Lending & Payments Fair value USD 7.4 mln Founded 2016 Investment USD 2.9 mln Key facts Key region Pakistan Ownership stake 22.0% Share of NAV: 1.3% Year of investment 2016 Pakistan is a scale emergi
Slide 75: Abhi
Abhi Employee wellness platform catering to the needs of employees between pay cycles Focus Salary on Demand Fair value USD 0.9 mln Founded 2021 Investment USD 0.9 mln Key facts Key region Pakistan Ownership stake 15.0% Share of NAV: 0.2% Year of investment 2021 Abhi is VEF’s second fintech investme
Slide 76: NAV valuation approach
NAV valuation approach Methodology and process VEF formally revalues its portfolio and sets a fresh NAV on a quarterly basis, in tandem with and signed off by its auditors, PwC. While the inputs of our cash and any listed holdings is clear, for all private company holdings, the fair value of each is
Slide 77: Thank you
Thank you