Earnings Call: Q4 2020

Feb 4, 2021

Good morning, everyone, and welcome to the presentation of Kinnevik's results for the Q4 and full year 2020. I'm Georgi Ganev, Kinnevik's CEO. And with me today is our CFO, Erika Soderberjonsson our Director of Corporate Communications, Toon Litsian and our Head of Strategy, Somal Khoestrom. I'm also delighted to introduce you to Natalie Tynben, who joined Kinnevik in January as a Senior Investment Director. Natalie, I know that you have hit the ground running and that you would like to take this opportunity to introduce yourself to the Kinnevik investor community. I think we have Natalie online. Sorry, apologies there. It was I was on mute still. Yes, just to say delighted to be joining the Kinnevik team at such an exciting time. I have, of course, been part of the Kinnevik family for extended family for a few years, Sitting on the Board of MTG and NEMET, but delighted to be properly in the throes of it. My background, I've spent the last 15 years or so investing in digital businesses, a combination of A combination of some places, but primarily as partner and senior partner At GMT, which is a specialist TMT growth and buyout fund. And then my career before that was very much focused on building digital businesses, a combination of start ups And building the digital divisions of large media groups, such as Discovery and Fox Kids within the Fox Group. So very much looking forward to this next stage of my Antinobix journey. Thank you very much, Natalie. It's so great to have you on board. And I think your first comment there was what we have heard the whole of 2020 since March. Sorry, I'm on mute. So I think we're getting quite used to that. But thank you very much for introducing yourself. I'm looking forward to work closely with you going forward. We will start today with a review of Kinnevik's year 2020, followed by some strategic highlights during the Q4, an update on our company's performance and our financial position. However, I would like to start by saying that despite the start of a vaccine rollout, the Coronavirus continues to have a devastating impact on people's lives and economies worldwide. We are humbled by this and as all of to follow the development closely. That said, Kinnevik is looking back at one of the most successful years ever. Our companies are well positioned to benefit from the accelerated shift to digital and we have seen very strong returns, particularly in online fashion, digital healthcare and the online grocery segment. But even more important than top line growth is that our companies have attractive new customer groups at very low acquisition cost. Groups of people that would previously have been difficult, costly and time consuming to reach. Usually changing people's habits is the hard part. Once they've tried a superior product, They tend to stick with it. Therefore, we're increasingly convinced that the shift to digital is here to stay. On the other hand, and as we have mentioned throughout the year, our travel and emerging market companies continue to suffer heavily from macro headwinds related to pandemic. We are immensely impressed by how these companies have been navigating through this storm. On Page 3, we have summarized the key strategic highlights during the Q4. As we have continued to execute on our strategy during the year, the Q4 provides a number of strong proof points validating our strategy. Investment activity remained vibrant as we continue to back the winners in our private portfolio through follow on investments in CityBlocks and Budbee. We also complemented our food portfolio with new investments in Hungry Panda and Simple Feast. And as announced yesterday, we have also invested in Vivino and I will go through these companies in more detail a bit later As the pandemic has shown the critical role of digital healthcare, we've seen a Strong traction and value creation across our healthcare portfolio during 2020. As evidence of that, Walgreens and VillageMD announced that they are accelerating their partnership. Walgreens is now supporting the rollout of up to 700 primary care clinics within next 4 years with intent to build 100 more thereafter. And something that I'm personally very proud of is the recognition we have received during the quarter for our sustainability efforts within climate and diversity. We truly believe that to be a long term successful company, You need to contribute to making the world a better place. And while we're very happy with what we have achieved and what our portfolio companies have achieved so far, We will never be satisfied. We continue to increase our efforts and to drive change internally within Kinnevik and across our portfolio. Our net asset value was up by SEK3.8 billion or 4% in the 4th quarter. For the full year of 2020, it was up by 52%. The development during the quarter was driven by strong share Price performance in Zalando and Global Fashion Group combined with a broad based revaluation of our unlisted portfolio. Our financial position remains strong with a net cash position of SEK4.8 billion. And Erika will take you through the development of our NAV in more detail, as well as the valuations of our unlisted companies in a few minutes. But first, I would like to take a step back and spend some time on what we have achieved during 2020, starting on Page 4. On the left hand side are the key priorities we set out to execute at our Capital Markets Day in September 2019. We entered 2020 with 3 clear priorities: continue to pivot towards growth, strengthen our portfolio balance and reallocate capital more dynamically. On the right hand side are some of the key highlights during the year. We have continued to double down in our healthcare strategy with new investments in CityBlocks, Joint Academy and Town Hall Ventures. We also invested further in VillageMD in Cedar and participated in a funding ground in CityBlocks, which closed just before the year end. Over the year, Our healthcare portfolio has grown to represent 20% of our total portfolio compared to 9% at the end of 2019 and about 3% at the end of 2018. Another key theme of the year is how we have complemented our food folio with new investments. We also invested further into MatHem, cementing our leadership position in the Nordic online food sector. We invested in common, a residential brand and tech enabled managed rental housing marketplace in the U. S. And with this, we executed on our strategy to broaden our consumer services portfolio towards business models that reflect consumer and broader market trends. On the theme of creating value in our large listed companies, We supported the merger between Teladoc Health and Livongo, creating an unmatched comprehensive platform for virtual healthcare delivery. And in May, we announced ambitious climate targets for Kinnevik in our portfolio, an initiative which we believe is critical to future proof our portfolio for a new low carbon economy. And in order to reach our targets, we are in the process of rolling out Climate strategy across our portfolio, which includes having our companies measure their emissions and set reduction targets in line with science. Last but not least, we also made a second sell down in Zalando, generating proceeds of about SEK6.7 billion. This also enables us to distribute SEK1.9 billion to our shareholders. With a portfolio of many exciting growth Companies in our focus sectors and markets, companies which are well positioned to benefit from the shift to digital and a strong financial position, We have executed on the key priorities, which we laid out at the beginning of the year. And now Page 5 is an overview of the follow on investments we made during the quarter. We participated in a funding round in CityBlocks that value the company at over $1,000,000,000 And as a reminder, our initial investment was in June 2020. And as such, this Successful funding round is a testament to the company's strong momentum and a validation of their business model. We also participated in a funding round in Budbee led by Swedish pension fund AMF. E commerce enablement is a key focus area for Kinnevik's consumer services strategy and Bardby has solved The last mile challenge and are offering consumers a new level of convenience as they increasingly turn to online shopping over physical retail. And the capital will be used to accelerate growth further and focusing on international expansion and product development. Go to Page 6. We have now provided you with an overview of the 2 food investments we made during the quarter, Hungry Panda and Simple Feast. Starting with Hungry Panda, which is a leading online delivery platform for Asian food. It caters specifically to Chinese customers outside of China, delivering food from Chinese restaurants and Asian grocery stores. The company was launched by Eric Liu, a computer sized graduate at the University of Nottingham, who wanted to fix a problem he experienced firsthand, getting hold of authentic Chinese food on demand away from home. And since its foundation in 2017, Hungry Panda has seen very strong growth and is now live in almost 50 cities across Australia, Canada, France, New Zealand and the UK. It has also reached profitability in 2 of its largest cities, London and New York. And this investment is an exciting complement to Kinnevik's food strategy and adds exposure to the out of home space, which is particularly popular with the younger users. Simple Feast produces and sells plant based meal kits and everyday essentials. The company was founded by Jacob Jung, who is deeply passionate about helping people embrace a plant based diet without compromising on the taste. Eating more plant based food is better for our personal health and better for the planet. And sustainability and health are global trends on the rise and the company has grown quickly over the last few years. During 2020, It had delivered 1,400,000 meals across Denmark, Sweden and in early 2021, the company also launched on the U. S. West Coast. Moving to Page 7, where you'll find an overview of our most recent investment, Vivino. Vivino is the world's most downloaded wine app and the largest online wine marketplace. The company was funded by Henri Zacharyasen and Theis Stendergarde, who set out to create a service for people that want to find great wines without having to become wine experts themselves. Today, Vivino has a very Strong community of 50,000,000 people who turn to the platform for its personalized recommendations, unbiased rating system and its large selection of wines. The market for wine is massive at around $400,000,000,000 per year globally. And online wine sales have risen steadily and have been further accelerated by the pandemic. Vivino has in recent years introduced a marketplace, which allows users to order the wines directly through the app. And so far, the company has only converted around 1.5% of its app users to buyers, but still has managed to reach significant scale and profitability. We believe Kinnevik can be a great partner to Vivino and the continued growth journey given our extensive experience within marketplace offerings. And we look very much forward to work on this company together with co investors, founders, managements and directors. On Page 8, we have provided some more details on the performance of our large listed companies. Zalando reported exceptionally strong and profitable growth in the Q3. The company added 6,000,000 new customers and raised the guidance for 2020 on the back of strong momentum. And importantly, this step change in demand and inflow new customers provides Zalando with a strong foundation to continue building from. Tele2 had a more challenging year 2020 and Felt the headwinds of COVID-nineteen. However, the company showed relative resilience and flexibility by growing the underlying EBITDA after lease for the full year despite of the pandemic. The Board of Directors proposes an ordinary dividend of SEK6 per share, which is a 9% increase from last year. Teladoc reported strong financial results for the Q3. This was driven by a broad based strength across the business and building on the momentum in the first half of the year. The company is seeing consistent growth in member visits and recently also entered new and expanded client partnerships with industry leaders. And on the next page, we've highlighted a few of our younger growth companies. At its peak, our 2 Nordic online groceries had customer intake of 10 times that of the pre pandemic levels. They continue to see strong growth. Kolonial has made important improvements on their path to profitability with picking efficiency levels in line with global leaders. MatHem continued to grow faster than the overall market, but it's dependent on the new warehouse, which is planned to be operational in 2022 in order to reach profitability. Similar to Zalando, Global Fashion Group also reported strong profitable growth in the quarter. They accelerated their marketplace offering and was cash flow positive for the Q2 in a row. This is a true testament to the strength on their business model. In addition to the accelerated partnership with Walgreens, VillageMD continued to grow its business through acquisitions of primary care practices and increased adoption of its proprietary healthcare operating system. The company is also participating in the new value based care program run by the U. S. Government across several states. For Babylon, 2020 was a true transformational year as many of the company's strategic initiatives began to deliver strong growth. It now has 20,000,000 members and added coverage in 8 new countries, including the U. S. Babylon is also taking a step into value based care, not to say the least through the acquisition of First Choice in California. In the UK, Babylon is now the largest primary care practice of any kind. I would now like to hand over to Erika to go through the main drivers of our net asset value development during the quarter as well as our financial position, starting on Page 10. Thank you, Georgi. When looking at the valuations of our private companies throughout 2020, they can, in essence, be summarized in 3 Key trends. Firstly, the boom in digital consumer healthcare multiples. Secondly, Online grocers and last mile logistics companies have fast forwarded their business plans by 12 to 18 months. Thirdly, emerging markets and travel have suffered heavily from macro headwinds. The Q4 of 2020 is a manifestation of these three trends. Looking first at our public companies, Tele2 continued its slight downward slope and the value of our investment was down 9% During the quarter, including dividend paid. Meanwhile, Zalando was up 9% or SEK 4,000,000,000 And Global Fashion Group has continued its massive rerating and was up 72% in the quarter. GFG ended up the year at 2 95% compared to the end of 2019. Teladoc, which finalized its merger with Livongo during the quarter, had a soft 4th quarter, but has regained that by margin in the start of 2021. Looking at our private portfolio, the fair value of our unlisted assets was written up by SEK 1.8 SEK 1,000,000,000 or 12% in the quarter. With SEK 200,000,000 net Invested, the total value increase amounts to SEK 2,000,000,000. We continue to value Kolonial on an LTM revenue basis and the fair value of our stake has been marked up by 32% on the back of continued strong operational performance and growth. For MatHem, we have kept our multiple largely unchanged as the company is behind Kolonial with regards to operational efficiency and profitability. Budbee is up 52%, following a successful fundraise in the quarter, fueled by the accelerated demand for last mile logistics during the pandemic. Our stake in VillageMD was written up by SEK1.4 billion or 41% As multiples have expanded in the quarter and as discussed earlier, we believe the gap between our valuation of VillageMD and its public Peers should narrow over time. Our investment in CityBlocks was marked up by SEK383 1,000,000 or 122 percent, in line with the December Series C funding round. Together with our investment of SEK155 1,000,000, the assessed fair value now amounts to SEK841 1,000,000. On Babylon, we have applied some of the parts valuation model of its different revenue streams As we move away from the milestone evaluation approach, in this quarter, we revert to the valuation applied in the company's most recent Financing round. This is on the back of improved visibility on the company's performance And it's pivoted towards value based care via the First Choice acquisition completed in October 2020. As previously mentioned, our travel and emerging markets companies continue to face headwinds. Omeo and Travelperk were both written down by 16% on the back of continued negative outlook for travel. Our emerging markets assets were written down by 15% in aggregate on the back of worsening macroeconomic outlooks and regional lockdowns. Those of you who have read our report more closely this morning may have noticed that we have made a provision for a potential tax liability in the quarter Based on the revised rules for accounting of uncertain tax positions in IFRIC 2023, Kinnevik has made a reservation of SEK 8 SEK2 million pertaining to a potential capital gains tax relating to the merger between Teladoc and Livongo. Gennevik considers that the transaction falls under one of the applicable exemptions and therefore should be considered tax neutral And relevant tax returns will be filed accordingly, but has deemed it prudent and in compliance with the guidelines to make a provision upfront. The impact of this provision on our reported net asset value is 0.7%. All in all, our net asset value amounted to SEK 111,700,000,000 at the end of That's SEK402 per share and represents an increase of SEK3.8 billion or 4%. The NASDAQ traded up 15% and the OMXS30 traded up 2%, while our share price appreciated by 14%. For the full year 2020, our NAV was up by 52% And our private portfolio was up 22%. We are, of course, as always, happy to answer You may have on our valuations when we move on to Q and As. I would, however, like to take the opportunity also to highlight Pages 24% to 26% in the report where we have elaborated more on our valuation assessments and methodologies. I would also like to update you that with yesterday's closing prices of our listed assets, Our NAV was SEK 123.8 billion, which is up 11% so far this year. Now please turn to Page 11 for an update on our financial position. During the quarter, we invested SEK0.8 billion. We received ordinary dividends from Tele2 amounting to SEK 500,000,000 together with an extra dividend of SEK 700,000,000. We also received SEK 1,200,000,000 in cash consideration from the Livongo and Teladoc merger and SEK500,000,000 from the sale of bread. This takes our net cash position at year end to SEK 4,800,000,000. So in summary, we have a very strong financial position, which gives us full flexibility to execute on our capital allocation plan and continue transforming our portfolio towards a higher share of private growth companies. With that, I would like to hand back over to for some closing remarks on Page 12. Thank you, Erika. Before we go into the Q and A, I would like to remind you that Kinnevik will host a digital Capital Markets day on the 24th February. We will be providing you with an update on Kinnevik's strategy, financial position and capital allocation framework. We will also present deep dives into our focus sectors and be joined by representatives from our investment organization and from some of our companies. You can read more and register for the event on our website and you're very welcome to participate. We're now ready to take your questions. So operator, please open up for Q and A. Thank And our first question comes from the line of Derek Lilibeth of ABG. Please go ahead. Your line is now open. Thank you and hello. I had a question on Babylon. I listened to Vielandri Global, which is also Invested in the company and they are quite outspoken, I would say, about the potential valuation of the company, the benefits That an IPO would bring, etcetera. It'd just be really interesting to hear what your view is of the potential And what are the biggest execution risks currently? And also, I was wondering how why you did not Participate in the latest funding round. Thank you. Thank you for that question. So let me start and if there is more specific questions on the valuation, I will hand over to Samuel. But I mean, we believe there is a great upside in Babylon for Sure. It's a fantastic company if you look at the growth last year. And as we say, many of these growth initiatives that the company laid out has started to deliver, right? And Babylon is capitalizing on 2 important trends. First is the move to digital, But the other one is the shift towards value based care. So it's kind of a strategy that is right spot on, on the trends we see, but it's also quite difficult to execute on. So far the company has been proven that they have these capabilities. As you know, we early look at these More isolated milestones of rolling out certain contracts, establishing this platform in the U. S, now that is done and we will move into another type of valuation methodology. But as we've said before, we look very much in our valuations at the kind of the lagging, the trailing numbers instead of the future numbers. And of course, that makes this gap or I would even call it a delay towards certain other investors that you might have been in touch with. When it comes to execution, I think the rollout of these large value based Contracts and the integrated delivery care products, the timing of those, I think that's the biggest uncertainty. The company has proven that a product works. Customers are happy, both end users, but also their B2B customers. But it's quite complex to roll these customer out. And I would say that is maybe The biggest challenge to make sure that you can forecast these contracts and you're able to roll them out in a timely manner. So that will be my kind of very general comment. But again, to answer very direct in your question, we believe that there's true potential in Babylon going forward. Yes. And for the founding round question. The founding round question is, if you look at our healthcare portfolio and you see that it has grown from 3% in 2018, 9% in end of 2019 and now a bit above 20% end of 2020. We have tried to create a broad portfolio with different type of exposures. So it's chronic care treatment. It's more infrastructural services like Cedar that focus on patients engagement. It is also the virtual care piece And it's the more specific value based care trend. Since our company Livongo or the company we've invested in was sold to Teladoc, We already got a very high exposure to the more telemedicine piece. I wouldn't say that Teladoc is the same as Livongo, But of course, they're exposing more or less the same type of trend. Therefore, we thought it was more important for us to continue to back some of our value based care companies like CitiBLOC. Another reason is that in CitiBLOC, We had less ownership in Babylon. So if you look at your capital allocation framework, we wanted to kind of turbocharge that ownership in CityBlocks rather than actually expanding our ownership in Babylon where we already are above 16%. That's very clear and very understandable. And just a follow-up on The sort of execution and the contract signings, are there any news there on additional signings And the execution currently is that mainly on contracts with like NHS and potential that Have a collaboration with the company for quite some time? I don't want to comment on individual contracts. I think it's better if the company does that. From our perspective, we, of course, have, let's say, very close we're monitoring very close the forecast and the signing of new contracts. And so far, we're very happy with the progress that we see. And as we said before, the U. S. Expansion is instrumental for Babylon, And there is also where we see the biggest growth. Got you. And just with regards to your new, this very exciting investment in Vivino, How does the competitive landscape look here in your opinion? I think when it comes to the community of wine, We haven't seen anything close to Vivino. They have 50,000,000 users. They have 200,000,000 ratings. They have over 70,000,000 reviews. And of course, if you look at the usage and activity, The app has been scanned scanning 1,500,000,000 bottles, right, not unique bottles. So the database today consists of 12,000,000 wines. So there's hardly anything within the wine kind of market you Can't find a vivino. So there I think they have a unique position. When it comes to the kind of marketplace, they've just started. And that's where Kinnevik see the biggest potential, right? So converting more than 1 of those 1% or 1.5% of the app users into buying wine. And as the founder have said many times, it's not necessarily about making people to buy and drink more wine, but it's actually defined the right wine and a better wine that can be paired with your food. And there we think that Vivino has this very unique customer proposition form. So we think it's not they're unmatched on that sector. All right. Sounds very promising. And finally, kind of a boring question, I guess, but I mean there's been some negative media Tien Tschinen, I guess, investigations regarding one of Badu's peers called the best About low salaries, extremely poor working environment, etcetera, I mean could you put Bagby in this context and sort of explain how they're doing things differently? Now I think generally, as you know, we take governance very seriously, and we have our standards that we follow. So many of these standards are specifically around working environments and so forth. And that's something we follow-up close with the company. Of course, it's very difficult for me to comment if Budbee has any issues. What we see in our reports is that is not the case. And we as an investor would never tolerate what you referred to at best. But I would say, I would rather redirect those Questions to the company directly so they can answer. But our opinion is that you should have a healthy working environment for all our companies. Got you. It's very clear. Thanks. That's all for me. Thank you. Our next question comes from the line of Joakim Goonal of DNB Markets. Please go ahead. Your line is now open. Thank you very much. Good morning. So a couple of questions from me. Given the very Strong performance of the listed portfolio, say, Calaboc and GFG in particular being up some 30% year to date. Do you think about the trade off, so you have a more dynamic capital reallocation that you've alluded to versus your already very strong balance sheet? I think we have a very strong financial position. And as Erica laid out, we feel that we have the flexibility to do investments. So there's no need for that reason. However, we also said that we want to be dynamic when it comes to capital reallocation And that we will continue to be going forward, but I have no further comments on that. But right now, from a cash perspective, we feel very safe. Roger that. And to come back to what Derek alluded to, I mean, some of your unlisted gems, That's the immature approach, say, various degrees of IPO readiness. So more broadly speaking, What's your view on the more, say, unconventional listing methods such as specs versus the more traditional processes? What do you prefer when the time is right, so to say? I think on that question, It's again maybe a boring general comment. We, of course, have followed all these facts. We think that's one of the tools in the toolbox. And I think it's Very difficult to say now what company would fit better to us back or a standalone IPO or to be kept private. What we think is interesting is that that's again a new alternative for a company to raise capital. And before every kind of funding round, We will evaluate with our co investors, our partners and the company, of course, what's the best way for them to raise as back as one alternative. Interesting. And just finally for me, on the Vivino investment, Seems really effective, but full addition from a financial perspective. But what's your thinking regarding, say, the alcohol exposure? Sure. Could it be, say, challenging from an ESP screening perspective for you to attract institutional investors in NOA? Yes, of course, we have considered that and I think it's a relevant question. We think, however, that the type of use case we CNVVINO is not about maximizing wine sales necessarily to eat individual. Of course, they would like to convert more Customers into buying wine, but it's about finding the right wine. So it's not the use case that you would typically see in all kind of bunk So bulk sales of cheap wine or liquor for that matter. So that's kind of one answer more from the kind of moral point of view. So if you would accept that restaurants sell wine as part of their menu and you drink wine paired to food, you would accept the use case of Vivino. The second question is, would this have any concrete impact for some of our investors? We think on that question, the kind of The number the sales in relation to our entire portfolio is very, very small. So as we see today, it should not have that impact. As long as no one have 0, absolute zero tolerance for wine, but that is not our understanding of most of the policies. So that is more kind of from a policy or portfolio perspective, if you will. Thank you. Our next question comes from the line of Lennar Osterberg of Carnegie. Please go ahead. Your line is now open. Thank you. Two questions, if I may. First of all, with Chris Bishop leaving, I was wondering, Should we read something into that, that you're changing which sectors you're investing if you will focus less on the Healthcare segment going forward? Valuations, you see them Maybe peaking here and you're focusing in other sectors? Or you will continue with the same strategies you've had before? And the second question I have is on the online food grocery side. As you mentioned, we've maybe jumped 2 years ahead in Adaptation, and you managed to reach new segments, which probably Have been hard to reach and not seen as traditional early adopters to new trends. Do you expect, based on what you're seeing now This quarter, have you seen a return to more normal behavior or people still continue with the online grocery shopping trend? Thank you. Thank you, Lena. Starting with the question regarding Kristen. The short answer is absolutely no. We're very excited about our healthcare portfolio and the sector as such. I mean, although it's been growing very, very fast, thanks to us deploying A lot of capital into that sector, but more importantly, these companies have been performing extremely well over the last years. We still see opportunities going forward. I would like to comment maybe also the fact that Chris is leaving. I regret to see him leave, But it's actually after 8 years in the company. And I'm very happy to have been a close partner with Chris and the entire team for the last 3 years. And during this time, I think we also strengthened the Kinnevik platform, both when it comes to external advisors and partners that we work with, but also the internal team. So the team as such will also have an opportunity, I would to broaden their responsibilities and take this forward. Secondly, I think it's a very strong portfolio, as said. So We will continue to work from a strong position. That's also important. Chris is leaving Kinnevik when he will leave in Q2 with a very strong portfolio behind. And thirdly, Chris is going to General Catalyst. And General Catalyst is a partner of Kinnevik already today. We are co investors with them in many companies in our portfolio, both within healthcare, but also in broader consumer services. And I think they will become an even more important partner going forward. So all in all, I think this can be an opportunity for Kinnevik. And I will also take this moment since you bring this up and also in front of everyone, thank Chris for all the contributions that he had brought to the company so far. And I'm looking forward to work on this transition. We also hands over to Natalie Tyndmann over the coming months and continue to work on existing companies and new opportunities. The second question is regarding The customers that have been acquired for the online grocers, and you're absolutely right, we've been able to reach potential customers where changing the Consumer habits has proven to be very difficult in the past. Now they have been more or less forced to use the service. And I think we can expect that as for every kind of customer cohort that you acquire in this type of business, some people will churn. So the survival rate is unfortunately not 100%. But what we see, which is very interesting is that Out of those cohorts that we have been able to acquire, it's not a very typical Pattern that customers that were difficult to acquire or were not, let's say, early adopters are more likely to leave the service. Sometimes they have actually received this no, let's say, wow feeling where they have tried something that it didn't actually think would improve their daily life that much. So it's very difficult to say now because we are unfortunately not through this pandemic, but We feel that of the new customer cohorts that we've acquired, there's a very good chance that many of those customers We'll continue to use the service going forward, but of course, with that natural churn and survival rate that we have seen also in the past. Could I maybe ask a second question? Sure. Go ahead. Or 3rd, actually. My math is not that great. But I was going to ask you on The warehouses that Martin is building, how is that process going along? And when do you expect those to be completed? By which date? We don't have a specific date. What we say is during 2022. And the reason for being not More specific than that is that we had, of course, an original plan, but then the pandemic came and we saw a surge in demand for both Kolonial and MatHem. Malteum, as you know, had more of a manual labor in the warehouse. And of course, to be able to cope with that extra demand during the especially the initial phase of the pandemic, required a lot of people to focus on that. So we took over The warehouse from Foodie, for instance, and manage that set up in just 5, 6 weeks. And we've also improved the processes in the existing warehouse. And that has, of course, postponed the time plan slightly. But we are very committed to have the new warehouse operationally up and running during 2022 and that warehouse will increase the efficiency and the customer experience significantly. So that's why we also quite kind of bullish on the MatHem case, although we know that that's a very hard requirement for profitability. Thank you. Thank you. Our next question comes from the line of Ramiel Khouria of S. Please go ahead. Your line is now open. Thank you, operator. Hi, everyone. A few questions from my side. Just on the topic of Digital acceleration and the pandemic leading to a pull forward, if you want or if you will, in terms of customer behavior, How should we reason about growth rates going into 2021? Could we see a sideways development in some of your assets Perhaps more specifically on the grocery ecom side where sort of churn and new customer intake basically map each other out throughout the year here? Hi, Emil. Actually, I don't think that's the case. The position we have Today across the portfolio and these companies that have seen increased customer acquisition that goes for Basically all our e com companies both within fashion and online groceries. I think that starting position is So good with these new customers, so that they can already now forecast a good growth in 2021. But of course, this is also dependent how the kind of pandemic continues if we're going to see this hyper growth of new customers or if it's going to be a more normal growth from a new baseline. But I don't see that the Churn will kind of net out the growth in these companies. These companies already had a strong growth before the pandemic. Now we are starting from a higher baseline, but as we just mentioned, 10 times more customers than the year before in the early days of the pandemic for online grocers means that you have a great customer group to start from in 2021. Let me rephrase that. Thank you, Georgi. But I mean, CAC levels Could easily surge going into 2021 because if you've seen a pull forward, obviously, customer cohorts that were supposed to come In the next 1 2 years came in 2020. So will the growth in 2021 then be CAC intensive, if you will, or do you foresee growth with existing customer cohorts as well, for instance? We see firstly, we see growth in existing cohorts because if you look at many of these services, the move, Let's say within the share of wallet or the shift of the share of wallet also increases over time as the customer becomes loyal, right? So the frequency increase and you have less kind of complement orders from other channels. That's one thing. So your loyal customer will become more loyal over time. Secondly, I think that even though we have supercharged the customer acquisition during 2021, is mostly in those consumer groups that we couldn't actually reach before or change the habits. So In 2021, I think it will be more normalized and definitely in 2022, but I don't think it will that we have had the growth in 2020 early 21 on, let's say, on netting out or netting the acquisition cost going forward. I don't think that's the case. It's Very clear. Thank you, Georgi. Another question on the topic of or on barbelone perhaps. I mean, you were quite explicit in the fact that In the scenario where you see some milestone wins, you were going to raise the valuation In Q4 and now in Q4, you decided to change the valuation framework. Could you just perhaps, if Samuel wants to chip in here, take me through Now how are you reason to arrive at this framework change and perhaps if they're lagging behind in terms of milestone wins? Yes, I will hand over to Samuel, I think, directly. Sure. Hey, Ramil. Glad you asked that question so we can shed some more light on that. So as you note, we're moving away from the milestone based approach we've been using in the last few quarters. And this Sort of approximate 15% dollar increase in our assessed valuation is in part a function of Babylon reaching that milestone, Sort of albeit in a different way than we perhaps originally envisaged. And it's also in part a function of some encouraging process that Georgi Covered, namely that they've strengthened their financial position. They grew revenues by around 4x in 2020. And they have this very, very strong pipeline of exciting new contracts primarily on the value based care side. Now I realize that This value change per se might be slightly underwhelming, but the big change here, As you point out, this is the change in our approach. And the model we're now using in assessing the fair value is based on forward looking multiples 2021. It's drawing on a number of peers, as I believe we lay out in today's report. And this, We believe will serve as a more dynamic approach to valuing this business in the coming quarters. And perhaps some sort of clarifications, We look at fiscal year recognized revenue. We're not looking at sort of end of year ARR or a metric taking into account Contracted but not recognized revenue. And as we've been discussing the last few quarters with you guys, Babylon is a hypergrowth business That makes forecasting tricky and also volatile. And that difficulty is clearly compounded by the need to take views on the pipeline and the conversion of that assessment fairly materially in a couple of ways and here is where our famous conservativeness comes into play. So firstly, we discount the peer multiples we use considering Babylon is still a smaller and less proven, less profitable business than the very large and mature peers. Secondly, we imposed fairly conservative assumptions relative to the company's own plan as it relates to primarily the timing and the conversion Of the pipeline. And lastly, we value revenues that stem from this primary care network that they acquired in the end of the year At the price that Babylon paid for that business rather than at the sort of higher multiples we might use for Babylon's other value based care Contracts stemming from other partners. Now being less conservative on either of those three parameters Clearly has a very positive effect on our fair value, and it's these 3 levers we will be pulling in the coming quarters. We'd rather have Babylon meeting their plan having a materially positive impact on our NAV rather than a neutral one. Was that helpful? It was a great answer. Thank you so much. A final one from my So I mean, Financial Services with exit of bread, you're down to is it 4 holdings in total? And I guess, least to say, they haven't performed And sort of in accordance with the broader group here. Could you and this is obviously a question for the Capital Markets Day as well, but could you take us through Now have you reasoned within that specific segment moving forward in terms of investments and exits? It's a fair question, Ramiel, and I think we will elaborate further on that on the Capital Markets Day. But I mean, I think the broad answer from my perspective is that When we presented our capital allocation framework in 2019, we got a few questions on we would like to distribute this capital evenly. Does that mean that every kind of third SEK will go to each one of those sectors? And we said clearly, no. We look at these opportunities, But more importantly, we look at the companies we find. And we have been we had more conviction in digital healthcare and some other sectors Then Financial Services until this day since we disclosed this framework, that's clear. I think in the FS space, We will evaluate also how much actually we will build upon our existing knowledge of the ecosystem around E commerce, for instance, right? So are there FS enablers around those companies that we know very well that we can actually use that expertise and to find these customers on a more kind of B2B2C model than a pure play B2C or direct consumer FS service, if you will. So that is still kind of in the making and tweaking, which we will talk more about on Capital Markets Day. But I think more importantly is that we have just seen so many great opportunities in the other sectors. And therefore, we've taken this decision to reallocate the money dynamically. That was basically the answer on bread. Great. That's very appreciated. Thank you so much. Thank you. Our next Question comes from the line of Nizba Naizer of Deutsche Bank. Please go ahead. Your line is now open. Great. Thank you. Just two questions from my end. Firstly, on the food value chain, it seems like you've now you're now covering a much broader Sort of footprint in the food value chain, you've got the online grocers, you've got the food delivery takeaway players with Hungry Panda and Meal Kits with Simple Feast. I just wanted to understand going forward, which of these 3 sort of sub segments do you think you want to expand your presence In given that you now have a foot in all three. And connected to that, could you also give us some color on the revenue and Profitability, profiles of Hungry Panda and Simple Feast? Yes. So basically starting with the first question, I think since we have already invested quite a lot of capital in the existing online groceries, if you look at pure downstream, we will more likely follow these companies and continue to back them as they perform rather than finding new opportunities in that specific case. I mean, that is basically the intention or the ambition as of today at least. So on that question, we Like to continue to broader the food space, which would naturally mean that we will look for opportunities like you've seen now in the recent quarter with Simple Feast and Hungry Panda. And of course, continue to support these companies again because they are growing very, very fast and would need capital going forward. So but it's rather that part of the kind of food sector that we will explore more when it comes to new opportunities. Then I would also like to say that there are many other aspects of the food sector. Now we talked about delivery of food in different type of business models, but you can also think of other type of kind of vertical integration or integration of the value chain. So The food space for us is super interesting and we think it's going to be a major theme for many years to come. When it comes to profitability of these companies, right now we've invested in Simple Feast and Hanker Panda for the purpose of growth. We think that they are capturing 2 very, very large trends that are important. So simple fees that move and pivot towards plant based food, which is good for your health, which is good for the planet. And that I think is something that we really believe in and we'll continue to that company and their geographical expansion. But both of these companies have good signs of profitability in more mature parts within the portfolio. So we know that the business model works. But of course, since they're expanding That heavily into new areas and spending a lot of kind of energy and efforts and money on acquiring new customers, We don't look for profitability in the near term. Did you have another tweak on that question? Or did I misunderstood you? No, that's perfect, exactly what I wanted to know. I guess my second question is on Vivino. And again, connected to the early question, You're saying that it's already profitable. Any color you can give us on the margins that they generate and also the revenue profile that they do? You've mentioned the GMV. And also you said that you're investing SEK 70,000,000. What is the current stake in Vibino with that investment? If you can share that, that will be great. Thank you, Jorgen. So basically, I would refer to the communication that the company has made regarding the sales. And in an article published end of January, the founders said that the company had sales around 250 $1,000,000 in GMV. So that's the figure I would like to refer to with a very fast growth or steep growth last year. When it comes to profitability that has not been disclosed, we see again that the best model works and already by converting 1% of the users with that scale and the $250,000,000 in GMV, The company can make profit on that business. So for me, it's what's needed in order to have the conviction to further scale the business. Any other margin details in that is not disclosed by the company and we cannot do it either. Same goes for the size of our stake. So it's, of course, linked to the valuation and the ratio of primary and secondary. So it's not disclosed yet, but it might be going forward. Got it. Thank you very much. Thank you. Our next question comes from the line of Christoph van der Kiehlen of Value Square. Please go ahead. Your line is now open. Hi. Thank you for taking my questions. Good morning. I had a question on the listed Assets of Zolando and Tiladoc. If I remember well, in one of the previous calls or maybe I read it somewhere, you said that since the Participation in Tilottok of Kinnevik went to 5%. It was not as much of a strategic asset anymore as it was when you had only Vongo. So I was wondering how you look at that. And also at Zalando, last year, you have sold down at a couple of points in the year your stake in Zalando. I was wondering how you look at that now going forward because I understand that Genovik could always look at these stakes as are we the best owner In these companies and can we then move forward? But it looks to me that Zalando and Teladoc are now mature enough not to need that much of a Strategic owner anymore. And I was wondering at what point you would be looking at selling. Would it still be like are we the best owner? Or are you looking at Can we have any other investments in that space that are more attractive at this point? Or will you purely look at what price can we sell these assets at Given also that you have sufficient cash at the moment to do further investments, there is not really a need to divest these. So I was just wondering How your point of view is on those two assets? Thank you. Thank you for the question. We don't Disclose any ideas we're thinking around portfolio composition beforehand, obviously, especially when it relates to public companies. But with that said, we spend quite a little time on that type of thinking. I mean, the majority of our time goes to finding new opportunities, support our companies through the different phases. And that type of support can be extremely different. So I mean in the beginning of a company's phase when it's a venture stage, It's more about being close to founders, sometimes finding new people to the business and so forth, building a strong group of partners and co investors surround a company. When it comes to scaling companies that have come a bit further, it's about helping them with, for instance, an international expansion, right, and finding other new investors that can be part of that journey. When it comes to mature companies, a different way of active ownership. Of course, those companies are autonomous to run their own business. That's something that we would expect for any public mature business. And it's not that Kinnevik is driving the business so to say, but there we can actually provide with a long term commitment allowing the company to execute on their strategy for the long term. That's the major kind of value add that we can provide. We can also support as we've seen In M and A deals with Tele2 and the merger with Tele2 and Com Hem, we can support such transformational move, for instance. So that's basically how we think. But I cannot say right now how we look at the portfolio composition. Right now, we think that all of our companies in the portfolio Makes good sense, and they complement each other in a great way. Okay. Thank you. Thank you. We currently have no further questions. I will hand back to the speakers for any final remarks. So thank you very much for listening and for your questions. Just as a last reminder, we will report the results for the first quarter of 2021 on the 22nd April. And last but not least, stay safe now everyone. The The pandemic is not over yet. So take care and we'll talk soon. Thank you very much. Bye.