Good morning everyone, welcome to the presentation on Kinnevik's results for the Q1 2021. I'm Georgi Ganev, Kinnevik's CEO, and with me today is our CFO, Erika Söderberg Johnson, our Director of Corporate Communications, Torun Litzén, and our Head of Strategy, Samuel Sjöström. We also have two special guests, Senior Investment Directors Andreas Bernström and Natalie Tydeman, who will join us for a strategic deep dive into food and groceries, as well as exciting opportunities within the enablers category. Let's move to page two. We will start today with some strategic highlights during the Q1, an update on our company's performance, the previously mentioned strategic deep dives, and key valuation changes. We will follow up with our financial position, as well as a recap of our priorities for 2021.
As we've been clear on in the last few quarters, valuations of fast-growing digital companies continue to be elevated compared to the pre-pandemic levels. While we clearly benefit from the investor appetite in companies such as ours, we are keeping our feet on the ground and focusing on the very strong growth and operational performance that our companies continue to deliver. On page three, we have summarized the key strategic highlights during the Q1. We started 2021 from a position of strength across our portfolio. In the Q1, we continued to see significant traction and interest in our companies, and several, including Budbee, Cedar, Cityblock, and Oda, attracted new partners in successful funding rounds. This will enable them to continue to grow their businesses as the shift to digital across our sectors continues with a high pace.
As we talked about during the Q4 call, we also made an investment into Vivino. We will shortly come back to these developments in more detail. The planned distribution of our shares in Zalando will enable Kinnevik to make a step change in our strategic transformation, even further increasing our focus on attractive, younger growth companies. This morning, Tele2 reported that the board is proposing an extraordinary dividend of SEK 3 in addition to the ordinary dividend of SEK 6. This is a clear proof point of Tele2's strong balance sheet and resilient business model that remains highly cash generative. For Kinnevik, the extra dividend means that we will receive SEK 560 million in addition to the SEK 1.2 billion from the ordinary dividend.
At Kinnevik, we have deeply embedded sustainability principles with clearly articulated targets, which are key for long-term returns, and our work in this area continues. During the quarter, we published our second TCFD report, this time taking the analysis a step further. We assessed how our investment strategy likely would perform in two different climate scenarios, one in which emissions are reduced in line with the Paris Agreement, and one in which emissions continue to rise at current rates. The analysis strengthened our understanding of the impact of global warming on our business and strategy and furthered our appreciation of the importance of preventing it. We also believe that our work within diversity and inclusion is business critical, and we were very happy to see this being highlighted in the beginning of March.
The Global Report on Gender Equality by Equileap ranks Kinnevik as number one in Sweden and number 61 globally. At the end of the Q1, this summed up to our net asset value being up by SEK 6.1 billion, or 5% compared to year-end, and amounted to SEK 117.8 billion, or SEK 424 per share. The increase was driven primarily by valuation increases in our private portfolio, widely distributed across companies, but concentrated to healthcare with material uplifts in Cityblock, Cedar, and VillageMD. The NAV was negatively impacted by a weaker share price performer in Zalando and lower valuations of our emerging market companies. Currency tailwinds provided a positive impact on our unlisted portfolio of SEK 1.2 billion, and our financial position remains strong with a net cash position of SEK 3.9 billion at the end of the quarter.
Erika will take you through the development of our NAV in more detail, as well as the valuations of our unlisted companies just in a few minutes. First, I would like to focus on some exciting developments in our portfolio during the quarter, starting on page four. This past year has once again demonstrated the fundamental importance and enormous inequality of healthcare systems across the world. Everywhere, demand and costs are increasing while efficiency and outcomes seems to be falling behind. Kinnevik has a broad and exciting healthcare portfolio, and these companies clearly demonstrate the potential for technology and digital innovation to improve this gloomy picture. During the quarter, we have seen exceptional performance in healthcare services, and two companies I would like to highlight here are Cityblock and Cedar.
In just four years since its launch, Cityblock has achieved positive results with its comprehensive care model. Data from Cityblock's first member cohort show a 15% reduction in emergency room visits and a 20% reduction in inpatient hospital stays. Cityblock sees around 70% member engagement compared to the health plan average of 5%- 7%, and they receive average NPS scores of over 85 compared to the provider average of 15. While delivering these outcomes, Cityblock has experienced an impressive 3x year-over-year revenue growth. In the Q4 of 2020, we participated in a funding round in Cityblock that valued the company at over $1 billion. In this quarter, Cityblock again attracted new capital at a materially higher valuation, which will be used to accelerate deployment of its community and value-based care model across the U.S.
Cedar, the patient engagement and financial technology platform that we first invested in back in 2018, also raised additional capital. The company has shown significant growth on the back of its high levels of patient satisfaction and digital engagement, maintaining an 88% patient satisfaction score. With a return on our capital invested in Cedar nine times to date, the company is yet another example of how Kinnevik backs world-class teams and business models that underpin a rapidly changing healthcare sector. On the next page, we have highlighted a few other of our younger growth companies with exceptional momentum. Global Fashion Group reported a record Q4 of 2020.
Net merchandise value grew 29% in constant currencies year-over-year to an all-time high, and the full year of 2020 was the company's first EBITDA positive- Stand in 2020, and the first two months of 2021 has started even stronger with an ambition to triple revenue during the year. The company is also launching in new markets and continues its box rollout with 650 live boxes by the end of the Q1. VillageMD has performed strongly in the past 12 months as the company was able to keep its clinics open during the pandemic, while the situation also pushed the company to another level of innovation and technology adoption. In the early days of the pandemic, VillageMD went from a single-digit telehealth utilization to 80%-90% across clinics.
The reduction in hospital and emergency room usage also led to positive developments of risk-based contracts driven by VillageMD providing highly accessible primary care. An exciting partnership with Walgreens continues. The company reports 65 Village Medical Clinics open so far and now launching two new per week. The company expects this to continue for the better part of the next five years in over 30 states around the U.S. With that said, let's now turn to page six, and I will hand over to Andreas to go into more details about our view of the food and grocery space.
Thank you, Georgi. Kolonial, now known as Oda, closed a funding round injecting NOK 1 billion of new capital into the company to support scaling and accelerating in Norway, as well as its international rollout plan. Kinnevik participated in the round and now emerge as the largest investor in the company. A company we first invested in almost three years ago, being impressed by the company's new take on online groceries, their understanding of operational efficiencies, and their relentless drive and commitment. We are excited that SoftBank and Prosus will join the company for the next stage of acceleration in the company's development, which as a first step means launching in Finland and Germany.
There have been many impressive developments at Oda, but one that is of key importance to highlight is their world-leading picking efficiency at 212 units per hour, which is reached through a combination of automation, in-house software, and lean management. As you may have noticed, we also announced a new funding round for Mathem today. Kinnevik participated pro rata with AMF and Stena investing SEK 100 million and SEK 50 million respectively, thereby increasing their ownership. The funding round also includes a debt facility of SEK 700 million provided by Proventus. After a stellar 2020, where the company grew revenues by 50% and outperformed the market in home delivery each quarter, this new funding will be used to continue to drive growth as well as launch our new fulfillment center next year. Next page, please.
The food sector presents a significant opportunity for Kinnevik, and we were early in identifying the opportunity in the space, deploying around 1.6 billion SEK in the sector between 2018 and 2019, well ahead of the curve and thereby benefiting from the exponential growth in the segment we have seen over the last 12 months. Oda was our first investment in the food space, and since then we've made a further five investments into the sector. We have met and analyzed over 200 food companies. We've learned a great deal, and we've built our hypothesis. Outside of the fact that food covers a truly large addressable market, we like the space because of its impact on people's lives, its importance in the sustainability of the planet, and due to the fact that change in this industry is still relatively nascent, which opens up opportunities.
More specifically, when we look at potential food investments, we look for companies that are addressing and taking advantage of tailwinds within consumption patterns, the importance of health, and sustainability. As you can see from our latest three investments in Simple Feast, HungryPanda, and Vivino, they all sit squarely within this investment thesis.
Thank you, Andreas. I think our partnership with Oda is truly a great example of the work and ambition of the Kinnevik team to identify changes in the consumer trends ahead of the curve. We are immensely proud of backing Karl and the entire team at Oda. I would like to invite Natalie Tydeman, who you all met on our last call, to take us more in-depth in another exciting area, enablers, starting on page eight.
Thank you, Georgi. Over the past few years, you will all have seen our investment focus evolve away from being a pure focus on B2C companies to include also B2B2C and even B2B businesses within the sectors and the themes for which we have the deepest conviction. This has allowed us to scan the full value chain and ecosystem for the most interesting opportunities. This has brought us to a new opportunity set of businesses that we call enablers. These are businesses by our definition, which have a B2B or B2B2C business model. They are solving a pain point in B2C or B2B companies' delivery of superior end customer experiences. They are providing services that enable their customers to scale quickly and capital efficiently, and thereby supercharging their growth.
There are many examples where the less visible points in the value chain have been the points at which most value has been created. Take as an example Shopify, the full suite e-commerce platform provider powering third-party e-commerce brands, which has a larger market cap at SEK 140 billion than Zalando, Etsy, Chewy, Farfetch, Wayfair, and ASOS all combined. Why do we like enablers? There's a few reasons. Firstly, they typically service large and growing addressable markets as they operate across multiple high-growth sectors, and they can scale with the customers that they serve. Secondly, their predominant business model is software as a service, or SaaS, which is attractive because it provides recurring pay-for-usage revenues with high gross margins and often annual or multi-annual contracts. Additionally, B2B or B2B2C as a go-to-market route typically allows more attractive customer acquisition metrics than B2C.
Enablers deploy cloud-based plug-and-play API platforms, which accelerates their rollout and means that they're therefore highly scalable. Enablers are typically deeply and seamlessly embedded into their customers' core processes via these APIs, which makes them extremely sticky. By our definition, enablers are solving a major pain point, and therefore have the ability to extract value, while at the same time delivering high return on investment for their customers. Lastly, and very importantly, we believe that we understand these businesses through our investments in their target customer markets, which means that we can source better, diligence better, and add more value. Let's turn to page nine, please. Without defining enablers as a standalone strategy historically, we've already had some great successes generating strong IRRs with these types of businesses. A few examples here.
Budbee, which shows an 89% IRR at current valuations, is solving pain points in e-commerce delivery. Bread, another e-commerce enabler, which we exited with a realized 34% IRR, enables e-commerce brands to provide a more flexible shopping experience and thereby drive more conversions. On the healthcare side, Cedar. Specialization and collaboration, tying our enabler investment themes into the thematic approaches within our other core sectors. This, we believe, will enable us to leverage our deep insights and our networks to give an advantage in sourcing diligence and portfolio management.
Thank you very much, Natalie. As you say, I think this is a great example of how we can leverage our network of founders, co-investors, our alumni network, our operating partners, and of course, our own knowhow from our focus sectors to identify new, interesting, and exciting investment opportunities. Let's now move to page 10 for Erika to go through the details of valuation changes and our NAV development.
Thank you, Georgi. The Q1 of 2021 was a transaction intense one. This is reflected in the more material valuation reassessments in our unlisted portfolio. The fair value of our unlisted assets was written up by SEK 6.4 billion, or 35% in the quarter. With SEK 1 billion net invested, the total value increase amounts to SEK 7.4 billion. Now to focus on the key valuation changes during the quarter. Cedar closed a Series D funding round led by Tiger Global Management and brought total company funding to more than USD 350 million. Strong operational development in combination with the funding round, which only had a minor dilutive effect for Kinnevik, led to a value uplift of our investment exceeding SEK 1.8 billion. This meant that the fair value of our Cedar investment increased by more than four times, corresponding to the valuation in the recent funding round.
This is a materially higher revenue multiple than we have previously applied. On a near-term forward-looking basis, this is at a considerable premium to peers, but at a normalized level when looking into 2022 and 2023. Our fair value for Cityblock is in line with the company's extended $192 million Series C funding round that closed in March, in which Kinnevik participated with $30 million. This means a valuation increase by more than 120% in Q1, with higher revenue multiples than previously applied. The applied multiple, however, remains at a material discount to peers. Our investment in Cityblock has so far rendered a 3.3x return, and we currently value our stake at SEK 2.1 billion. Our fair value assessment of VillageMD increased by SEK 2.5 billion, driven by strong performance, forward outlook, and increased multiples applied.
We have yet again contracted our discount on the back of continued strong performance and key direct-to-consumer peers consistently trading at multiples around 10 times forward revenues. We focus increasingly on forward-looking multiples in triangulating our fair value assessment. The company continues to be valued at a fairly material but shrinking discount to peers on a future-looking basis. The fair value of our 21% shareholding in Oda increased by more than 40% in the Q1 to a mark in line with the recent fundraise, with revenue multiples being calibrated upwards. On an LTM basis, our valuation implies a premium of around 15%-25% to the stronger performance in our composite peer group of discretionary eCommerce and meal kit businesses. The value increase in Budbee of 23% is primarily driven by the company consistently delivering on or above plan.
Budbee continues to perform strongly and is planning to triple its top line during 2021, a growth rate significantly higher than more mature logistic businesses, all while retaining healthy gross margins. We are, of course, as always, happy to answer any questions you may have on our valuations when we move to Q&As. I would also like to take the opportunity to highlight pages 23- 25 in the quarterly report, where we have elaborated more on our valuation assessments and methodologies. Let's turn to page 11. All in all, our net asset value amounted to 117.8 billion SEK at the end of March. That's 424 SEK per share and on a pro forma basis, post the planned Zalando distribution, represents an increase of 9.1 billion SEK or 15% in the quarter, with continued strong momentum in our private portfolio and value-based care assets driving value increases.
The Nasdaq traded up 3% and the OMXS30 traded up 17%, while our share price appreciated by 2%. Finally, with yesterday's closing prices of our listed assets, our NAV was 121.2 billion SEK, up 9% so far this year. Now please turn to page 12 for an update on our financial position and capital allocation framework for 2021. During the quarter, we invested 1 billion SEK. Further, we released 196 million SEK from the divestment of shares in Alliance Data that was received as part of sale of Bread completed in Q4 2020, generating a realized IRR in excess of 30%. This takes our net cash position at the end of the Q1 to 3.9 billion SEK.
We have a continued 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 younger growth companies. During the coming Q2, we expect to receive the first tranche of Tele2's ordinary dividends amounting to approximately SEK 560 million. With the extraordinary dividend announced by the company this morning, we expect a total of around SEK 1.7 billion in dividends from Tele2 during 2021. As for our capital allocation in 2021, we are looking to invest somewhere in between the capital put to work in 2019 and 2020, which means a range between SEK 2.3 billion-SEK 4.6 billion.
We are likely to again be slightly overweight in new investments relative to our framework as we continue to build a balanced growth portfolio across sectors, stages, and business models with an ambition of adding four to six new companies to our portfolio. As a reference, we have year to date invested SEK 0.6 billion into one new investment, Vivino, and SEK 0.4 billion into follow-ons. With that, I would like to hand back over to Georgi again for some comments on the proposed distribution of Zalando on page 13, and some closing remarks.
Thank you, Erika. In February, we announced our intention to distribute our entire shareholding in Zalando to our shareholders. This distribution means that we significantly increase our focus on younger, high growth businesses. Zalando is also a very good example of how Kinnevik works as an investor. We invest early. We actively support our companies through the different phases of their growth journey. We believe Zalando will continue its strong trajectory underpinned by consumers' accelerated shift digital. As we saw earlier this week, Zalando expects to deliver between EUR 80 million-EUR 100 million in EBIT for the Q1, a very strong result. While I'm excited to observe as Zalando continues to execute on its own growth strategy and create significant value for shareholders going forward, I am even more excited by the transformation of Kinnevik that the distribution entails.
As you are all familiar with by now, this transaction means that our growth portfolio will go from approximately 40% of portfolio value to 68% and unlisted assets from 22%- 36%, based on the valuation at the end of Q1. This means that our younger businesses can really shine in their own right. We're now approaching the execution of this distribution, and therefore I would like to remind you of the timeline and changes in portfolio balance. If the general meeting on April 29th, approves the distribution, the last day of Kinnevik's share trading, including the value of the Zalando distribution, will be May 14th. Trading in the redemption shares will be conducted between May 19th and June 9th. On around June 18th, the redemption shares will automatically be redeemed for Swedish Zalando shares.
The record date for redemption of redemption shares is June 16th. During the period June 23rd- July 14th, Swedish Zalando shares that the holder cannot trade with on any stock exchange may be re-registered free of charge to German Zalando shares that can be traded with on the Frankfurt Stock Exchange. Let us turn to page 14. Finally, before we open up for the Q&A, I would like to reiterate our strategic focus areas for the year to come. Our priorities remain clear, and we will continue to evolve the portfolio towards a higher proportion of growth companies in our target sectors and markets. We will continue to strengthen the portfolio balance across sectors, stages, and time to liquidity, and to reallocate capital more dynamically. We're now ready to answer your questions. Operator, please open up for Q&A.
Thank you. If you do wish to ask a question, please press zero one on your telephone keypad. If you wish to withdraw your question, you may do so by pressing zero two to cancel. Our first question comes from the line of Joachim Gunell of DNB Markets. Please go ahead.
Thank you for that. Good morning. Perhaps if you can provide your thoughts here on, it's been stellar unrealized IRRs here in the unlisted portfolio year to date, and we saw a sequential uplift that was quite substantial. On the back of this, how do you see the unlisted portfolio driving further NAV growth from where we stand today throughout the remainder of the year?
Thank you for the question. I think, of course, it is a difficult question because we really do not know how the markets will develop going forward, right? What we can look at is the operational performance of these companies. Not only revenue growth, but also clear signs and strong unit economics that means that these models have a clear path to profitability. That is, of course, also very comforting for us looking at these companies and how they perform. We also see that many of these companies are still very early in their maturity or development, which means that they can expand internationally, like an Oda, for instance, that have proven their business model in Norway, but now has the possibility to launch in Finland and later in Germany next year.
We see companies like VillageMD that has just started to accelerate the partnership with Walgreens and have a plan to continue to roll out new Village clinics across the U.S. We also see companies like Cityblock and Cedar, where we invested early when there were more question marks around these business models, but where we now see very strong tractions. Our conclusion of this and our view is that there is still very much potential in these companies going forward. Of course, as I said in the beginning, it needs to be seen with an overlay of where the markets are.
Understood, Georgi. If we look at holdings such as Global Fashion Group and Livongo/Teladoc, it took perhaps an IPO and a year before the market really gave these business models credit when the bulk of the value was materialized. How do you trade off here? Pivoting towards growing the share of unlisted assets while some of your more mature unlisted assets are perhaps ready to take the next step?
I think, as we say, we would like to focus our portfolio and increase the exposure on younger growth companies. In today's market, where it's very attractive sometimes for these young companies to attract or to increase capital in a public market, we cannot hold them back from doing so, right? Sometimes we see when the market is like it is today, that companies go in the public market a bit earlier. Here comes our flexibility in holding a company also when it's a public company, right? A lot of the uplift or the value creation that we have seen in companies like Livongo, but also a company like Zalando, has come after the company has become a public company. Reallocate capital.
Understood. Just the final from me then. Can perhaps Samuel remind us again, how you think, and what you need to see before you become more constructive of a holding such as Betterment? They have now doubled AUM and customers in the past three years. Your assessment of what it should be valued is still flat.
Sure. Hi, Joachim. I think the very short and crude answer to why we haven't seen stronger returns on our Betterment investment to date is that we overpaid some five odd years ago when we made our first investment. That's sort of a sunk cost by now. More interestingly, looking forward, we believe this company could start delivering progress that will also be reflected in our NAV statement over time. I think many of you saw the company posting their Q1 update, where you saw that the Q1 was a record one in terms of customer intake and net deposits. You also know that we've changed our valuation method from a DCF into revenue multiples, which also lends itself to a more dynamic approach as it relates to valuation. First couple of years, pretty flat. Going forward, looks fairly exciting.
Very clear. Thank you.
Our next question comes from the line of Derek Laliberté of ABG Sundal Collier. Please go ahead.
Good morning. Perhaps I'm missing something here, but when it comes to VillageMD, I certainly get the strong performance of the company, the accelerated partnership, et cetera. The valuation uplift in this quarter is quite massive. I'm just wondering what's happened in the last three months for you to increase the valuation by 50%. Is it only a coincidence that this corresponds to these media reports we're seeing about IPO and, I guess, the reported valuation? Thank you.
Sure. Hi, Derek, Samuel here. VillageMD is an interesting case. It's not a typical Kinnevik one in that we came in ahead of the curve, the curve being the IPOs of these more tech-enabled D2C care provider companies such as One Medical and Oak Street. We came in at a very low price, sort of the opposite of Betterment, to be frank. I think as relates to the multiple expansion in our books or discount contraction, whichever way you want to look at it's something we have been fairly clear with in prior quarters that this is our ambition. It's not only that VillageMD needs to continue to perform. It's also that these comparable companies continue to trade fairly stable, as Erika said, at around 10 times forward revenues. We're taking another incremental step towards marking Village more in line with these peers.
There are more indications of these valuation levels. Just a week ago, we saw the IPO of agilon health, which to a certain degree is reminiscent of VillageMD, and that business is also trading at these higher levels. Clearly the demand for value-based care providers is very high in the market right now. As it relates to the valuation in a hypothetical IPO, I would argue that prospective public market investors could be more forward-looking than we are in valuing this business. Being more forward-looking, even on a risk-adjusted basis, would lend itself to a higher valuation than where we come out in our assessment this quarter. As Erika mentioned, we're still at a fairly material discount on 2021, and looking into 2022, considering Village is growing immensely faster than the listed peers, that discount expands even further. We're still sort of catching up.
The increments won't be as big as they have been in the last few quarters, but we're still in that sort of catch-up mode for now.
Gotcha. Thanks for clarifying that. That's all from me.
Just to remind everyone, if you would like to ask a question, please press zero one on your telephone keypad. If you wish to withdraw your question, you may do so by pressing zero two to cancel. There'll now be a brief pause while any further questions are being registered. Once again, if you would like to ask a question, please press zero one on your telephone keypads now.
Okay. Thank you. Do you have a question?
We have a question from the line of Lena Österberg of Carnegie. Please go ahead.
Yeah, good morning. I was just wondering if you'd maybe say something about in which areas you're looking for new investments going forward. You say that you will allocate the majority, or a little bit more than half of your investment this year into new investments. It'd be interesting to hear in which fields you see the best prospective and current valuations?
Absolutely. That kind of expansion, and Vivino lately, that expansion will continue. We have mentioned at the call today where Natalie talked about enablers, where we have some very strong proof points with Budbee, Cedar, Bread in the portfolio, but also Pleo, for instance, with a B2B2C kind of service. That is an area we will continue to look at. We are, as we've said many times before, still very excited about our consumer businesses area, where we have been moving a little bit from only kind of inventory-based e-commerce player to more asset-light players. I think the general answer is that we always try to leverage our network, our know-how, and our co-investor partners for us to have a clear edge when we speak to founders and potential investment opportunities.
I've said that before, there are many times where we actually won't invest because of valuations, and there might be more kind of forward-leaning investors to invest in really strong companies.
Can I ask you on the enablers, isn't there a risk if you go for other enablers in the same verticals that they are competing with each other? That doesn't matter, you can also have several eggs in the same basket?
Yes and no. I would say that if you look at a Budbee, for instance, I would argue that Budbee can approach all e-commerce players in the whole world, maybe but Amazon. That's a relatively large addressable market, and we have no issues of Budbee serving Zalando and serving Boozt in the Nordics, or ASOS for that matter, which they actually are currently doing, and on top of that, H&M. We see that enablers are different type of verticals where we can leverage our understanding of the customer pain point and how important, in that case, last-mile logistic is for overall customer experience. Would we invest in another last-mile logistic company in Europe? Probably not. Maybe if we see some great consolidation over time, and that could be a way for us to kind of capture that consolidation in the market.
Otherwise, we think we have already started to kind of invest and back the winning horse.
That's clear. Thank you.
We have no further questions at this time, so I'll hand back to our speakers.
Thank you very much for listening in and for your questions. Before we end, as usual, just a reminder, we will report the results for the Q2 2021 on the July 12th. Please then stay safe, everyone. Thank you.