Release Date: October 23, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- VEF AB (VEFFF, Financial) reported a 9% increase in NAV quarter on quarter, reaching $475 million, which is a 24% increase from 2022 lows.
- Creditas, a major asset, showed strong performance with a 16% increase in originations quarter on quarter and over 30% year on year.
- The majority of VEF AB (VEFFF)'s portfolio is now breakeven, with over 90% of the portfolio in this position.
- The company has seen fresh capital inflows, with Konfio raising capital at NAV mark, reaffirming the company's valuation process.
- Exit markets, particularly in India, are showing signs of life with a robust IPO market, providing potential opportunities for VEF AB (VEFFF).
Negative Points
- VEF AB (VEFFF) has a relatively low cash position of $13.2 million, expected to decrease to $11 million by year-end, raising concerns about liquidity.
- The company has an outstanding bond of $40 million, which could pose a financial burden if not managed properly.
- There is a risk of market overheating, particularly in India, which could affect the valuation of portfolio companies like Juspay.
- The company has not yet realized any exits, which are crucial for improving liquidity and reducing debt.
- VEF AB (VEFFF) faces a significant discount to NAV in its share price, which it aims to address through various strategies.
Q & A Highlights
Q: How important are Indian comps for your valuation of Juspay, and is there a risk of the market becoming overheated affecting Juspay's valuation?
A: Alexis Koumoudos, Chief Investment Officer, explained that while there are a couple of Indian comps in the valuation group, the valuation is more weighted towards global comps. There is no India premium factored into Juspay's valuation, treating it as a global Indian play. Any India premium realized in an exit or fundraise would be considered upside to the NAV mark.
Q: Regarding liquidity, with a cash position of $13.2 million expected to drop to $11.2 million, how critical is it to strengthen the cash position, and what level would cause concern?
A: David Nangle, CEO, acknowledged the importance of their cash position and mentioned they have been closely monitoring it. They have options to realize value from their portfolio to increase cash and pay down debt. They are confident in realizing one or more exits in the next 3 to 12 months, which would provide comfort and demonstrate their ability to translate NAV into dollars.
Q: On the bond, is the part you bought back canceled, or could it be sold in the market for extra liquidity?
A: David Nangle confirmed that from a SEK500 million bond, $40 million is still outstanding, and they bought back $10 million, which is sitting on the balance sheet. This could be reissued into the market as one of the liquidity management options.
Q: Can you provide more details on the growth and profitability outlook for Creditas?
A: David Nangle highlighted that Creditas has reaccelerated growth, with quarterly originations up 16% quarter-on-quarter and over 30% year-on-year. The company targets a growth rate of 25% plus while maintaining profitability, indicating positive trends in growth and profitability.
Q: What is the current status of capital flow within the venture ecosystem, particularly in emerging markets and fintech?
A: David Nangle noted that capital flow has returned to the ecosystem, with significant fundraises occurring in markets like Brazil, India, and Mexico. This capital flow is crucial for the growth of their portfolio companies and validates their NAV marks, indicating a healthy and recovering market.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
