Good morning, everyone, and welcome to this telephone conference that we have gathered you all to discuss the announcement of this morning that Kinnevik intends to distribute its shareholding in Zalando to our shareholders. With me, I have our CEO, Georgi Ganev, as well as our CFO, Erika Söderberg Johnson, and Head of Strategy, Samuel Sjöström. I will hand over to Georgi Ganev for a few initial comments, and then we will start the Q&A.
Good morning, everyone. This is Georgi speaking, thank you very much for calling in to this telephone conference. It's a big day for us as we are accelerating our strategic transformation. I would like to go through the rationale of this move, what it means to our portfolio, and what we can expect going forward from Kinnevik. I'll be happy, together with my team, to answer any questions you might have. Today's announcement then. As you've already read, I suppose, we will propose a distribution of our Zalando shares to our shareholders. This is not the end of a journey. It marks the beginning of a new chapter for both Kinnevik and Zalando. After our 10-year long journey generating an 8.6x return on our initial investment, we can say that this has been a fantastic journey for Kinnevik.
We've been true supporters of Zalando's strategy since its inception, and we truly believe that the company has the platform and the team to continue to create a lot of value for customers and for shareholders. This distribution amounts to SEK 55.1 billion in value for our shareholders, and that corresponds to approximately 206% of its shares. That allows the Kinnevik shareholders to decide whether to take part in Zalando's continued journey as direct shareholders or to monetize their exposures, and of course, with ability to reinvest in Kinnevik's continued execution. We also know that we have strong support among our shareholders, so we have 50% of the votes in favor for this proposal. This is truly a step change in Kinnevik's ongoing transformation.
If we zoom out a bit and we look at what has happened in the past three years, where the kind of non-large public assets were less than 10% of the portfolio value, growing to today around 37, Post the distribution of Zalando will go up to 67. Almost 70% of the portfolio will be skewed towards these early growth assets in our focus sectors. We think that is very exciting, because it allows our shareholders to get an exposure to a unique portfolio, a portfolio where you would not probably be able to invest yourself as a shareholder. With the latest successes we've seen in digital care, healthcare, and also within our food investments, we think this journey will continue. The third point here is it's all about shrinking to grow.
The pro forma net asset value of SEK 71.4 billion or 259 SEK per share is more or less the same as the portfolio value was at the end of 2018. During these past two years, we've created a lot of value, and of course, our intention is to continue to do so. There's no point in compounding assets for the sake of it. We believe that our shareholders can own Zalando directly after this transaction, and we believe that we will keep the agility and the nimbleness of Kinnevik going forward. What we would like to see, of course, going forward is that our younger growth portfolio that tomorrow will represent almost 30% of the portfolio value will continue to grow and increase in proportion. We will also have Tele2 left in our portfolio, which creates a strong foundation of a resilient asset and a solid dividend stream.
That together with our SEK 4.3 billion in net cash basically makes us very comfortable that we can continue to execute on our strategy and continue to support our existing companies in the portfolio, as well as finding new opportunities. As we said again before, we plan to host a Capital Markets Day on 24th of February, where we look forward to elaborate further on our investment strategy and also present some deep dives in our portfolio and also welcome some of our portfolio companies and founders to the Capital Markets Day. We look very much forward to that event, and we hope, of course, that you can attend. Going to the next slide, you will see the outline, the timetable, where we have outlined the different steps. The ambition is to have this done and ready by mid-July.
Last slide is the picture of the portfolio transformation in terms of net asset value. Here again, to what I referred to, end of 2018, the portfolio value or the NAV was SEK 7.5 billion. After the spin-off, on pro forma basis, will be SEK 71.4 billion. What we think is exciting here is that, again, the share of the early growth assets is almost 70%. We have a solid net cash position, and we have Tele2 who provide us with dividend, fueling our continued transformation and our support to our growth assets. That was basically the presentation that we planned to show you today, and instead of taking more time to go through the details of it, let's open up for Q&A.
Thank you. Ladies and gentlemen, if you do wish to ask an audio question, please press zero one on your telephone keypad. If you wish to cancel that question, you do so by pressing the zero two to cancel. There'll be a brief pause while questions are being registered. My first question comes from Joachim Gunell from DNB Markets.
Thank you. Good morning. Just some questions regarding the timing of this transaction, and then shrinking to grow. Should we read anything into that, 2021, 2022 should be a period where you will crystallize a lot of NAV value from your unlisted portfolio, which would have otherwise not moved the needle in such a large extent?
I think that's a good way to describe it, Joachim, because, of course, we have made a mark, I think, in our early growth portfolio with companies like VillageMD and Livongo, of course. The question we got a couple of years ago is that, do you really have something in your portfolio that could move the needle? I think we have proven that. Of course, the effect of value uplift in our fast-growing companies will have a larger impact without having one asset like Zalando representing more than 40% of the portfolio value. That's correct. We expect to continue to see these assets grow. We look, of course, at the operational performance, mostly the underlying performance of these companies that we are very happy with.
The valuation, as you know, is impacted by a lot of other factors, such as the multiples on the markets and so forth. Our ambition is to continue to grow these assets, and the effect of that will be clear when we have shrunken our portfolio.
Very good. This is very much in line with the communication regarding your earlier, call it, sell down in Zalando, that you were not planning to realize any further cash proceeds. Did you evaluate any other alternatives with the remainder of your Zalando owning?
We think this is a clear best option for Zalando, for Kinnevik, because we have a lot of shareholders within our cap table that would like to capture the future value creation of Zalando. Selling, let's say, on their behalf and distribute cash from this point was not an ideal situation as we saw it. Of course, if there's a strategic sell, you can always discuss it. It's a matter of price. We see great upside in Zalando going forward, and therefore, I would say that price would have been very high, a very clear premium. Without that option on the table, I think this is definitely the best option for our shareholders in terms of value creation. I would like to repeat that.
This has nothing to do with our view on Zalando's future, or we believe it has stagnated or reached some sort of plateau that it can't grow anymore. We think this company has a fantastic platform. We're distributing a company where it has a strong position, maybe stronger than it's ever had before. That's also important to underline.
Very clear. Just a final one, perhaps for Erika. With the Millicom transaction fresh in mind, can you talk just a bit about the various tax implications on capital gains from this type of transaction, depending on what type of option shareholders should choose here with regards to the Zalando stake?
I will hand over that question to Erika.
Yes. As always on a dividend, you will be taxed on the value of the dividend received. We have a Q&A already on our website that sort of goes through the different things to think if you're Swedish-based or if you're non-Swedish, the tax impact of that, and also lessons learned from all the questions received in connection with the Millicom distribution. We are well prepared and have a call center also set up and also already been in contact with the tax authorities. These details will all be communicated, and Q&As are already provided. Different shareholders will be taxed differently depending on how you hold your shares, where you're based, and of course, if you're a Swedish or a foreign holder.
Yes, these are questions that we believe is really important for us to make sure that we can answer and communicate and direct questions from our shareholders.
No, perfect. I'll have a look at your website. Thank you very much.
Thanks.
Thank you. Our next question comes from the line of Ramil Koria from SEB. Please go ahead.
Thank you, operator. Morning, everyone. Two questions, if I may. Perhaps I'll take both straight away. First off on the split between listed and unlisted. Georgi, are you sort of comfortable with how things are looking today? Perhaps if you could shed some light as far as IPO timing of portfolio companies go. The second question relates to a potential or if you've considered a dual listing of Zalando. I can see the constraints, you're having a bit less than 21% of the company. I can almost imagine how discussions have been, but have you even sort of talked of the topic?
Thank you, Ramil, for your questions. Let me start by the portfolio, this kind of balance and what we see going forward. I think first of all, we are very excited about this pivot that we will have, again, almost 70% skew towards the early growth assets. We think that's a fine balance. However, we also expect those assets to grow faster than Tele 2, for obvious reasons. Over time, I think that will continue to increase. The split within the early growth portfolio when it comes to private and public assets, that's more difficult to predict because it's really about what's the best way for these companies to raise capital. There are, of course, a lot of private placements, private investments that we can be part of, but there are also IPOs, SPACs, and other types of tools in the toolbox.
For us, as we have the flexibility to own a company through different phases, we are quite indifferent actually if it's a public early growth company or private early growth company. What we have said, though, is that we focus our new investments into the private ones, because that's where we think we can provide something more unique to our shareholders instead of buying kind of early, less mature public companies. Now last but not least, I would like to say that looking today at the portfolio, we believe we have a unique composition of companies. As far as we know, there are no other public investors in Europe that could offer this type of exposure to digital healthcare with companies like Babylon, Teladoc, VillageMD, Cityblock, Cedar, and also Joint Academy.
We have a portfolio that probably is in the top range globally and definitely as a European investor. Already by looking at these assets, we can provide something that is very unique for the shareholder. We also have, as you know, a lot of capital now deployed into the food sector. That's, again, a place where we think that we will see a lot of growth going forward and the excitement around that area also is around what value we can bring to our shareholders. Going to your second question regarding the potential dual listing. Yes, obviously, that is something that we have considered. The thing with the dual listing is that it needs to be something that could provide enough value to Zalando shareholders long term.
As it looks today, we can't see that there are enough reasons to list Zalando on the public stock exchange in Stockholm as it looks now. It has less to do with us owning 21% or 31% or 40% of the company. I think we need to see that there are strong merits for such a listing. Today, Zalando shareholders, most of them can own shares on the Frankfurt Stock Exchange, and they have demonstrated that also more recently when they raised capital through that bond. There is a strong underlying demand for the Zalando share, and we believe that those of our shareholders that cannot or would not like to own Frankfurt-listed shares, they can actually use this period of time to actually sell the rights and reinvest that capital elsewhere.
Crystal clear. Thank you.
Thank you. Our next question comes from Nizla Naizer from Deutsche Bank. Please go ahead. Your line is now open.
Great. Thank you. I have a couple of questions from my end. Firstly, Georgi, could you maybe give us an understanding as to what the overlap is in your shareholder base and Zalando's? We're trying to understand what's the possibility or the potential number of shareholders who could potentially want to sell Zalando's shares once the distribution has been made. Just to get an understanding there. Secondly, why did you decide to distribute the stake all at once and not potentially sell it down in portions the way you've done in the past? Connected to that, was there ever an idea to monetize a part of that stake for your own sort of capital investment needs going forward, instead of distributing it outright?
Lastly, just to understand how it would work for your existing shareholders, if they do want to monetize the share that you are distributing to them, how would they do it? Would they receive the share, which is listed in Sweden, and then they sell it in that sort of Swedish marketplace? Do they sell it to you, and you monetize it on their behalf? Just to get an understanding as to how that works on the back end would be great. Thank you.
Thank you, Nizla. I can say directly that for the third question, I will refer that to Erika and Samuel, but the overall answer is that it will be traded in Swedish stock exchange, the rights. They will go through how it will work technically. I think I touch upon briefly on the first question, even though I would open up for comments from Torun there. I think it's important to say that although there's an overlap between Kinnevik shareholders and shareholders owning Zalando directly, that cannot be seen as a reason for those shareholders to sell. Because the support that we have received for this distribution, that amount to 50% of the votes in Kinnevik and 30% of the capital, that support is not there because people wanted to receive Zalando shares and then immediately sell.
It's because they see a strong value in Zalando going forward, and this is actually a good way for them to accrete ownership in Zalando. I will let my teammates to elaborate on that answer if we should comment on the exact overlap. I will now focus on the second question you had. Sorry, what was the second question again? I didn't write that down.
The second question was on why you decided to dispose the stake all at once.
Yeah, exactly.
Whether you still want to monetize it. Yeah.
Yeah, exactly. You combine that with disposal at once and whether we should monetize it. I think when it comes to monetization, as we said earlier, we have monetized Zalando twice. We have recouped the initial investment capital. Well, actually, a little bit more. We did that during a period when Kinnevik was trading at a significant discount. Of course, raising capital in the market would not have been, let's say, as attractive option. We didn't have a net cash position that was this strong. Today, we have a net cash position of more than SEK 4 billion. We have Tele2 that will provide us with a steady dividend stream going forward. We are trading at a very narrow discount or a slight premium.
I think for us today, we see a lot of alternatives to secure our financial position that is already strong to start with, I have to repeat, than to monetize Zalando. We know that selling down Zalando would have come with a discount. Since we see a lot of upside in Zalando going forward, and we have such a strong support for this proposal, we think this is the best way for us to hand over this fine company for our shareholders that would like to continue to own it directly and accrete ownership if they're already owners, or new shareholders that would like to buy Zalando. This could be a good opportunity because, of course, the liquidity will increase short-term. We know that there's a strong demand for international investors to have a higher exposure to Zalando.
Of course, with a limited liquidity, it's difficult to accrete those terms of ownership. That is something that this, of course, transaction and distribution will facilitate. Should we have done it in several steps? Of course, that would have been an option, but I think also when you disclose something like this, it's big news, and we think it's better to actually rip the bandage at once and basically tell the market, "This is our intention. This is what will happen." With it, again, support from our shareholders, there is no kind of speculation of what will happen. Even if we would see some turbulence short-term, we actually think that long-term, this will be something that's very accretive for both Kinnevik and Zalando, and it will be shown in both respective share prices.
Okay.
Torun, do you want to comment on the shareholder base, or is that something we don't comment?
No. There is a certain overlap, of course, as you mentioned, Georgi, but like you said, we don't believe that's a necessity that they need to sell immediately. I don't know, Samuel, if you had some additional comments on that.
Sure. I'd say we're pretty optimistic about our shareholders' ability and appetite to hold Zalando directly. I think there are two types of shareholders, basically, who you could argue could face potential issues. That's retail investors and it's Swedish or Nordic institutions. If we start with retail, I think you've all seen the fairly strong trend of retail investors increasingly looking outside of Sweden when they build their portfolio, and that sort of tailwind of retail ridding their home bias clearly supports this transaction. I think you also all know that Zalando is one of the more popular foreign stocks on the Swedish online broker platforms, and through this transaction, it'll clearly gain a number of new Swedish retail shareholders.
Secondly, as it relates to the Swedish and Nordic institutions, firstly, you will note that this transaction has strong support from our shareholders and among them, several Swedish institutions, some of them with a fair amount of flexibility as to where they allocate their capital, and some of them with fund mandates that may prohibit certain funds from owning German stock. However, despite that, we still remain optimistic about how this transaction will trade out even for these shareholders, considering fund managers may be able to reallocate in between funds with different mandates. There may even be room for exceptions, even for Swedish-focused funds. Lastly, funds that cannot hold the stock typically have a fairly long and generous grace period, which decreases the risk of any sort of supply shock.
Whatever shares that need to be sold, we find comfort in the strong demand for shares in what is Europe's number one e-tailer. When we spun off Millicom's share price appreciated by a handful of percentages during the trading window in the rights to receive Millicom stock. I'd say we're optimistic about how our shareholders will act and how this transaction will play out.
Great. Very helpful. Thank you.
Then, Erika, I hear you had questions regarding some more practicalities and just basically the timeline that we intend to propose for the AGM is laid out on page four in the presentation material that was sent out, which gives you the overview. Just as a general, our shareholders will receive redemption shares. These redemption shares will be traded in Stockholm, on the Nasdaq Stockholm, approximately mid-May to mid-June, during a three-week period. During this period, you can decide if you want to sell your redemption shares or if you want to keep them. If you keep them, you will receive Swedish Zalando shares, which you then can re-register as sort of the underlying German Zalando share.
Okay. Thank you, and as there appear to be no further audio questions, I return the conference to the speakers for any closing remarks.
Okay, thank you very much. Thank you for the questions. Thank you for calling in. We're super excited about what this means for Kinnevik and Kinnevik shareholders. We welcome you to our Capital Markets Day, where we'll discuss our early growth portfolio further. Thank you very much. Have a nice day. Bye.