Vef Ab · OMXSTO:VEFAB
Vef Ab — Q4 2021 Earnings Presentation
78 slides from Vef Ab's earnings presentation, February 2022
Slide 1: Investor Presentation 4Q 2021
Investor Presentation 4Q 2021 The emerging market fintech investor
Slide 2: Recent highlights
Recent highlights Ending 2021 with record NAV mark – USD 762 mln 2021 closed out with our USD NAV almost doubling YoY to USD 762 mln while our USD NAV per share was up over 55% YoY. One of our strongest years of performance since inception. Creditas closes largest funding round to date with marquee
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 – 4% Brazil – 56% Russia Emerging Europe Africa - 2% Mexico – 18% Pakistan Mexico India Russia – 2% Africa India – 9% Brazil Pakistan – 1% VEF investme
Slide 7: Portfolio commentary
Portfolio commentary VEF portfolio NAV as of 31-Dec-2021 • We have 14 holdings as of 4Q21, diversified by geography, Portfolio business type and stage of development. USD 762 mln • In 4Q21, we made four follow-on investment: evolution through - USD 25 mln into Creditas. 4Q21 - USD 6 mln into Juspay.
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 NAV 50% 6,0 40% 30% 5,0 20% 10% 4,0 0% 3,0 -10% -20% 2,0 -30% -40% 1,0 -50% 0,0 -60% dec-15 jun-16 dec-16 jun-17 dec-17 jun-18 dec-18 jun-19 dec-19 jun-20 dec-20 jun-21 dec-21 dec-15 jul-16
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 USD 19 mln Founded 2013 Amount invested USD 11 mln facts f
Slide 11: VEF shareholder structure
VEF shareholder structure Owner Holdings, shares Holding % 1 Ruane, Cunniff & Goldfarb 217,718,740 20.9% 1 Libra Fund 124,198,165 11.9% Fidelity Investments (FMR) 95,139,868 9.1% Swedbank Robur Funds 89,102,205 8.5% 1 Wasatch Advisors Inc 83,295,964 8.0% 1 Wellington Management 49,585,580 4.8% Fidel
Slide 12: History of co-investing alongside some of our largest shareholders
History of co-investing alongside some of our largest shareholders in our later-stage portfolio companies VEF shareholders Co-investments with VEF 12
Slide 13: 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 14: VEF's Portfolio
1 Introduction to VEF – The Emerging Market Fintech Investor 2 VEF’s Portfolio 3 Investment Opportunities 4 ESG 5 Appendix 14
Slide 15: VEF portfolio summary
VEF portfolio summary Invested amount Dec’21 fair value Company Country Segment Inv. date Ownership % (USD mln) (USD mln) Brazil Asset focused Ecosystem Dec-17 8.9% 98.4 394.1 Mexico Diversified FS for Mexican SMBs Jun-18 10.3% 56.5 135.6 India Mobile Payments Platform Apr-20 9.7% 17.0 42.4 Emerging
Slide 16: 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 16
Slide 17: 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 18: Brazil constitutes 56% of VEF's portfolio
Brazil constitutes 56% of VEF’s portfolio with four active investments Remaining portfolio 43,7% 56% 51,7% 1,4% 1,6% 1,6% % of 4Q21 total portfolio NAV 18
Slide 19: Creditas
Creditas Brazil’s leading digital-first secured lending platform Focus Asset Focused Ecosystem Fair value USD 394.1 mln Founded 2012 Investment USD 98.4 mln Key facts Key region Brazil Ownership stake 8.9% Share of NAV: 51.7% Year of investment 2017 Creditas in brief Creditas in figures Creditas is
Slide 20: Creditas' strong business model reflected in 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 21: 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, we see considerable upside in Creditas in the coming months 3Q20 4Q20 1H21 3Q21 Creditas $255m Creditas acquires Creditas acquires Creditas partners Credi
Slide 22: 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 22
Slide 23: 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 18% of VEF’s portfolio • Banks focus predominantly on serving
Slide 24: 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 10.3% Share of NAV: 17.8% Year of investment 2018 Revenue: 137% CAGR 2017-2021 G
Slide 25: Konfio
Konfio Data-driven financial services 25
Slide 26: 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 accounting software Konfío raises $125m Series E VEF raises VEF share price and NAV
Slide 27: 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 27
Slide 28: 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 29: Juspay
Juspay India’s leading mobile payments platform for online merchants Focus Mobile Payments Fair value USD 42.4 mln Founded 2012 Investment USD 17.0 mln Key facts Key region India Ownership stake 9.7% Share of NAV: 5.6% Year of investment 2020 Juspay in figures Juspay is India’s leading mobile paymen
Slide 30: 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 ~1.6x scale compared to next four peers combined Value and volume of UPI transa
Slide 31: Rupeek
Rupeek India’s fastest-growing asset-backed digital lending platform Focus Secured Lending Platform Fair value USD 13.1 mln Founded 2015 Investment USD 12.0 mln Key facts Key region India Ownership stake 1.7% Share of NAV: 1.7% Year of investment 2021 Indian gold loan industry and Rupeek in figures
Slide 32: 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: 1.3% Year of investment 2021 Blackbuck in fig
Slide 33: 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 33
Slide 34: Emerging Europe
VEF Emerging Europe Investments Cross-Border Remittances Emerging Europe constitutes 4% 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 35: TransferGo
TransferGo A leading digital cross-border remittance provider in Europe Focus Cross Border Remittances Fair value USD 29.3 mln Founded 2012 Investment USD 13.9 mln Key facts Key region Europe Ownership stake 12.3% Share of NAV: 3.8% Year of investment 2016 TransferGo in figures TransferGo is a low-c
Slide 36: 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 37: 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 38: Investment Opportunities
1 Introduction to VEF – The Emerging Market Fintech Investor 2 VEF’s Portfolio 3 Investment Opportunities 4 ESG 5 Appendix 38
Slide 39: 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 40: Annual investing
Annual investing 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 100,00 16 Follow-on investments vs. new investments (USD mln) 14 90,00 14 18 80,00 12 12 11 12 70,00 70 11 10 6
Slide 41: 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 42: VEF investment case and outlook
VEF investment case and outlook NAV continues to reach new highs with a strong base for continued growth 2021 was another strong year for our firm and portfolio as reflected through our NAV performance. Irrespective of market headwinds, we feel comfortable that we have a portfolio of assets that sho
Slide 43: ESG
1 Introduction to VEF – The Emerging Market Fintech Investor 2 VEF’s Portfolio 3 Investment Opportunities 4 ESG 5 Appendix 43
Slide 44: 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 45: 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 46: 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 47: 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 48: 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 49: 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 50: 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 51: Appendix
1 Introduction to VEF – The Emerging Market Fintech Investor 2 VEF’s Portfolio 3 Investment Opportunities 4 ESG 5 Appendix 51
Slide 52: Appendix
5 Appendix A. Deal sourcing B. History of value creation C. Governance structure D. Other portfolio holdings 52
Slide 53: 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 54: 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 55: 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 56: Appendix
5 Appendix A. Deal sourcing B. History of value creation C. Governance structure D. Other portfolio holdings 56
Slide 57: 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 58: Appendix
5 Appendix A. Deal sourcing B. History of value creation C. Governance structure D. Other portfolio holdings 58
Slide 59: 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 60: Appendix
5 Appendix A. Deal sourcing B. History of value creation C. Governance structure D. Other portfolio holdings 60
Slide 61: VEF portfolio summary
VEF portfolio summary Invested amount Dec’21 fair value Company Country Segment Inv. date Ownership % (USD mln) (USD mln) Brazil Asset focused Ecosystem Dec-17 8.9% 98.4 394.1 Mexico Diversified FS for Mexican SMBs Jun-18 10.3% 56.5 135.6 India Mobile Payments Platform Apr-20 9.7% 17.0 42.4 Emerging
Slide 62: 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 63: Revo
Revo Leading buy now pay later player in the Russian market Focus Merchant Payments & Consumer Credit Fair value USD 13.2 mln Founded 2013 Investment USD 6.7 mln Key facts Key region Russia / CEE Ownership stake 23.0% Share of NAV: 1.7% Year of investment 2015 The Afterpay of Russia/CEE, Revo REVO p
Slide 64: Brazil constitutes 56% of VEF's portfolio
Brazil constitutes 56% of VEF’s portfolio with four active investments Remaining portfolio 43,7% 56% 51,7% 1,4% 1,6% 1,6% % of 4Q21 total portfolio NAV 64
Slide 65: Nibo
Nibo Brazil’s leading accounting SaaS provider for SMEs and accountants Focus Accounting SaaS provider for SMEs & Accountants Fair value USD 12.6 mln Founded 2012 Investment USD 6.5 mln Key facts Key region Brazil Ownership stake 20.1% Share of NAV: 1.6% Year of investment 2017 Nibo is the leading a
Slide 66: 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 345,000 410,000
Slide 67: FinanZero
FinanZero Digital marketplace for consumer loans in Brazil Focus Consumer Loan Marketplace Fair value USD 11.9 mln Founded 2016 Investment USD 4.2 mln Key facts Key region Brazil Ownership stake 18.4% Share of NAV: 1.6% Year of investment 2016 FinanZero in figures FinanZero is a pioneering digital m
Slide 68: 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 69: 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: 1.4% Year of investment 2017 Magnetis is a digital investment advisor in Brazil, democratizing access to
Slide 70: 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 18% of VEF’s portfolio • Banks focus predominantly on serving
Slide 71: 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 72: 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 73: 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 4.6% Share of NAV: 2.4% Year of investment 2015 JUMO is a full technology stack for
Slide 74: 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 75: 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 3.0 mln Key facts Key region Pakistan Ownership stake 22.0% Share of NAV: 1.0% Year of investment 2016 Pakistan is a scale emergi
Slide 76: Abhi
Abhi Employee wellness platform catering to the needs of employees between pay cycles Focus Salary on Demand Fair value USD 1.4 mln Founded 2021 Investment USD 1.4 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 77: 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 78: Thank you
Thank you