Earnings Call: Q3 2017

Oct 26, 2017

Good morning, everyone, and welcome to the presentation of Kinnevik's results for the Q3 of 2017. I am Joakim Anderson, Acting CEO and CFO. And with me today is as for previous quarters this year, Chris Bischoff, our Senior Investment Director and Turon Litzjen, our Director of Corporate Communication. We will start today by taking you through a presentation on the results released this morning. After that, we are happy to answer any questions you may have. If we start by turning over to Page 3, we have provided you with a summary of the key highlights for the quarter. Our operating companies had another quarter of very solid performance and we are pleased to see that their continuous efforts to drive growth and profitability are paying off. This is also coming through in Kinnevik's net asset value, which increased by 5% in the quarter. As expected and highly supported by Kinnevik, growth remains the key priority for Zalando and they delivered this quarter on that ambition with sales growth of around 28.5%. For GFG, we are pleased to see that they are progressing on their path to profitability, having almost halved their losses this quarter compared to last year. Our communication assets are well positioned to leverage the shift from voice to data with Millicom and Tele2 showing continued good momentum and Com Hem delivering another very solid quarter. MTG continued its digital investments and had its 5th consecutive quarter of more than 5% organic sales growth. On the investment management side, we invested $65,000,000 into Betterment, which increased our shareholding to 16%. This once again shows our strategy to invest over multiple rounds and support the companies we believe in as they grow and deliver on their plans. Similarly, we also continued our efforts to divest smaller non core assets to reduce the number of companies in our portfolio, as evidenced this quarter by the completion of Blacker Farming's asset sale and our divestment of Glossybox. The NAV increase of 5% this quarter was driven by strong share price performance by our large listed companies, Zalando and Millicom in particular. Kinnevik's balance sheet continues to be strong with a net debt position of NOK900,000,000 corresponding to 1% of the portfolio value. Our total shareholder return year to date is 28%, as I'm sure you can appreciate we are very proud of. As of yesterday, our NAV was $87,000,000,000 up 2% from the quarter end following in general positive market reactions on our company's 3rd quarter results. On Page 5, we have laid out the performance of our large public companies in more detail. As you are aware, the public part of our portfolio is a major driver of value creation for Kinnevik as it accounts for 87% of our portfolio value. This is also the reason for why we at the beginning of the year made a top priority to grow and protect the value of these companies, which is something we are focused on every day. Zalando delivered strong growth in line with its strategy and also announced the launch of a beauty category during the spring of 2018. The Q3 is a seasonally weak quarter when it comes to profitability and the EBITDA margin came in at around 0 according to their preliminary numbers. Zalando will release its 3rd quarter results on the 7th November. Millicom in the quarter as the company's efforts over the last 2 years to accelerate deployment of its high speed data networks, both mobile and fixed, are starting to show results. The positive development was led by Latin America with Paraguay and Bolivia showing particularly strong growth. I will come back to Millicom's strategy execution on the next slide. Both Tele2 and Com Hem experienced strong momentum in the quarter as Tele2's new mobile offerings were well received by its customers across markets and the Netherlands in particular where Tele2 saw strong traction and growth. And Com Hem's continued focus to improve customer satisfaction resulted in a record high quarterly customer intake. As a result of the increased confidence in the company's ability to continue generating strong growth and cash flow, Com Hem's board are to propose a 50% increase in the cash dividend at the next AGM. All of MTG's 4 business areas contributed to the strong growth in the quarter. However, profitability was somewhat weighed down by digital investments in MTGX. MTG continued its strategic transformation to capitalize on the increased consumer demand for digital entertainment, as demonstrated this quarter with the completion of the acquisition of online gaming publisher, Kongregate, and the sale of MTG's Baltic operations. You can see that the common thread across all these companies is a focus on creating great consumer experiences, growing revenues and profits and continuous reallocation of capital to position the businesses to capture the next opportunities to come. Now on Page 6, we wanted to give you a more in-depth example of this as it applies to one of our most long standing investments, Millicom. Over the last years, Millicom has made substantial progress on implementing its strategy of a twofolded reconfiguration of its business. As you know, the global mobile market shift away from voice and SMS continues as smartphone penetration and high speed data use increases at an accelerating pace. By driving rapid growth in mobile data and expanding its cable footprint in Latin America, Millicom is reconfiguring its revenue mix towards these high growth segments. The company had close to 900,000 4 gs net adds in the 3rd quarter, placing Millicom firmly on track towards reaching its goal of 3,000,000 net adds for the full year. The 4 gs consumer base now amounts to $5,600,000 or 18% of the total mobile customer base. As for the fixed high speed data networks, another 257,000 new homes were passed in the quarter, bringing the total to almost $1,000,000 for the full year, which is an improvement of over 100% compared to last year. This momentum in deploying its high speed data networks, both mobile and fixed, resulted in a return to positive organic service revenue growth in the quarter and is evidence that Millcom's efforts of the last year are starting to show results. The second part of the reconfiguration strategy is to enhance the operational and capital efficiency through disposals of non core assets that do not under cost of capital as well as active balance sheet management to monetize dollar assets and increase local currency debt. One example of this is the sale and leaseback of wireless communication towers in Colombia and Paraguay earlier this year. On top of this, Millicom is driving a number of cost saving initiatives on track to deliver over $200,000,000 of savings. We are pleased with the progress that Millicom is making, which is being reflected in their strong performance and fully support the company's increased focus on the execution of its strategy and ambitions to deliver faster growth and higher returns over time. Now as we turn to Page 7, one of the key elements in achieving sustainable growth over time is continuous improvements of the customer offering, which is achieved through a firm commitment to innovation and product development. Our large listed companies continue to find new ways of meeting and exceeding the expectations of their customers. We have included a few examples on this page. MTG is leveraging its Pan Nordic reach to secure exclusive sports rights to bring millions of fans closer to the sport they love. Com Hem is seizing the shift in consumer behavior away from traditional linear content distribution towards on demand as an opportunity to leverage its high quality broadband network and become an aggregator of content through the launch of the next generation box, the TV hub. Zalando has set up a dedicated program integrate startups on its platform, allowing it to implement new products and services faster, while the startups get access to Zalando's size and market reach. The aim is, as ever, to create a better and more personalized experience for the consumer. And finally, on this page, Claro launched a private private loans to consumers during the quarter as a next step to broaden its financial services offering and as a complement to its main services, payments, invoicing and installment payments. As the loan service is completely digital, the administrative costs are kept low, which allows Keyera to offer loans on attractive terms. Turning over now to the performance of our private portfolio during quarter, I would like to hand over to Chris Bischoff, our Senior Investment Director. Thank you, Jochem. Q3 was a quarter of growth for the private portfolio across our 3 key sectors of e commerce and marketplaces, financial services and health care. As you know, in the private portfolio, we focus on finding and investing in and building category defining businesses that address significant needs in large addressable markets. As these investments mature, they're very well positioned to benefit from secular growth in digital services in their markets. Picking out a few of the highlights by company on Page 8. At GFG, we saw further uplift in active customers and revenue and a further reduction in operating losses. I will touch on the highlights of the financial and regional performance on the next page. Quicker, we saw growing traffic as its services become more available to more customers via the growth of low cost 4 gs data networks in India, an uplift in the replies per listing, an uplift in revenue and an uptick in gross margin as operating leverage begins to come through in the business. At Betterment, as Joakim mentioned, we invested a further $65,000,000 into the business, which remains the leading independent digital investment adviser in the U. S. I'll return to their quarterly performance later on. At BEMA, we continue to enlarge the addressable market for its life insurance and health products, most recently in Pakistan. Today, BEMA has 24,000,000 registered customers and has an addressable market of over 300,000,000 captive customers via its existing M and O partners in Asia Pacific, in Africa and in Latin America. These M and O partners represent a unique asset of the business and have a total addressable base of 1,300,000,000 customers. So BMEA has a lot to go for over time. At Babylon, we are delighted that GP at hand partnership with NHS is now live in a number of areas. Consumer demand has been very strong and the company is working hard to extend the partnership such that everyone in the U. K. Who wishes to use Babylon as their GP can do so. At Livongo, the business had another strong quarter operationally and continues to build out on its product offering to empower people with chronic conditions to live better lives. Let us move on to the GFG Financials on Page 9. Revenue growth in the 2nd quarter was 16%. As Joakim mentioned, we are pleased by GFG's progress on the path to profitability. Adjusted EBITDA loss nearly halved year on year, driven by an improved gross profit and continued focus on technological and operational The The company has a strong financial position above all, closing Q2 with a pro form a cash balance of EUR 271,000,000 On Page 10, we highlight a number of the regional developments at GfT, reflecting growth and margin improvement. Namoda had a challenging quarter with the unseasonally cold spring impacting the springsummer launch, coupled with price investment required to trade effectively a continued price sensitive market. However, it still generated NMV of €100,000,000 a 17% uplift on a constant currency basis. Defiti had a better quarter relative to Q1, showing accelerated NMV growth of 14% and slightly improved margin despite continued difficult market conditions in Latin America. Zalora and the ICONIC continued their growth momentum, delivering NMMB growth of 25% and drove up margins materially. Namshi rebounded with a strong quarter, growing NMMB by 20 percent on a constant currency basis. The significant increase in growth mirrors the lifting of the Saudi Arabian austerity measures at the end of April. Moving on to Betterment on Page 11. Betterment launched the low cost digital advisory category 7 years ago. Then it was the sole voice calling out for a different type of advice. Now the category is mainstream and is growing rapidly. As we said at the last quarter, the new financing led by Kinnevik will enable Betterment to continue to grow across its 3 divisions and to increase product development in line with the faster development of the market. To maintain its lead and differentiation, the company continues to invest in new features with a focus on personalizing the user experience. You should expect the cadence of product launches to increase over time. This quarter, Betterment rolled out asynchronous advice for its customers via chatbot. It also added 3 tailored strategies, including Betterment's own socially responsible investing portfolio and income and smart beta portfolios from Black and Goldman Sachs. In the quarter, AUM rose by $1,300,000,000 to $10,900,000,000 and average customer balances continued to trend upwards. We were particularly pleased by the performance of Betterment for Business and Betterment for Advisors, the 2 divisions that are not consumer focused, which have now become meaningful in size. I'll now hand back to Joakim to go through Kinnevik's financial position. Thank you, Chris. So on Page 13, we have outlined the changes in valuation of the largest private companies. The value of our private assets decreased slightly in the quarter, but adding the investment in Betterment of 527,000,000 the total value of the private portfolio was stable at $11,300,000,000 The fair value of Kinnevik's shareholding in Global Fashion Group amounts to just under $5,000,000,000 at the end of the Q3. The net revenues valuation multiple of an average of 1.3x corresponds to a 4% to 6% discount to the peer group. Worth noting is that the discounts vary between GFG's different regional businesses. The average discount increased slightly during the Q3 due to primarily the fact that the valuation of Nanshi is unchanged from last quarter as it's based on the joint venture transaction value during the Q2. On page 14, you can see that the major contributors to the increase of our NAV by 5% was strong performance by Zalando, Millicom and Tele2. Our NAV per share was up from DKK298 to DKK311 in the 3rd quarter. Our total NAV increased from DKK81,900,000,000 to DKK 85,700,000,000 in the quarter. As per yesterday, our NAV is up another 2% to DKK87 1,000,000,000 or DKK 316 per share. Overall, per quarter end, our NAV is up by 18% so far this year. Turning to page 15. The final page in this section is a summary of our investment activities and an overview of our financial position. In comparison to a very busy first half of the year, we made net investments of 465,000,000 Since the start of the year, we have made a total of €619,000,000 in net divestments. Adding this quarter's net investment number to dividend received from Com Hem and Black Horse Farming as well as our operating and net financial expenses results in a net debt position of €900,000,000 at the end of the quarter, which corresponds to 1% of the total portfolio value. Total shareholder return amounted to 25% for the last 12 months and 20% for the past 5 years, which is well within our financial target of delivering annual total shareholder return of 12% to 15% of the business cycle. Now, let's go to the concluding remarks of this presentation on page 17. This slide has been with us during this year's quarterly presentations and rightly so as our priorities for 2017 remain unchanged. As I said in the beginning of the call, our large public companies are the main drivers of value creation for Kinnevik, and our top priority is to grow and protect their value. In the Q3, we can safely say our companies have showed solid performance, and we're also confident that they are well positioned to continue growing in a profitable way. Our private companies are progressing according to plan and our investment team remains firmly focused on supporting them in achieving sustainable growth. As an active and responsible owner, good governance and sustainability is a key focus area for Kinnevik. To assess the sustainability performance of our companies, we have developed a comprehensive framework of standards. It is our ambition to assess our companies in their fulfillment of these standards on an annual basis, and we will provide more in-depth description of this work in our annual report for 2017. Another key priority is to identify and invest in new exciting businesses that complement our existing portfolio. This also includes increasing our shareholding in companies that we like. And an example of that is our second investment, Inveterment, which was made in July of this year. On top of that, as you might remember, we have added 2 companies to our portfolio during this year, Livongo and Com Hem. We believe that value is ultimately created by people and as such significant time and resources are dedicated to attract, retain and reward our people through means which align their interests with those of our shareholders. Lastly, we strive to build and promote a strong brand and culture through proactive and transparent communication with all our stakeholders. In summary, the Q3 was a solid one for Kinnevik, and we are well positioned to continue delivering on our strategy throughout the rest of the year. This is my final report as acting CEO. And speaking for the full Kinnevik team, I look forward to welcoming our new CEO, Georgi Ganev, on the 1st January next year. Thank you very much. And let's now open it up for questions. Thank The first question we have received comes from Mr. Elias Porszyn, ODDIA. On the disposals, Blacher Farming and Glossybox, previous management was quite vocal about the amount or the number of holdings and the potential number of holdings in the future. Could you give us your current view on how many holdings you have now and how many you see that you should have in the future? Hey, Ellis. Thank you for the question. Well, I don't think we are that focused on a specific number. I think I said before as well. I think we are still on the journey where we try to focus more on a fewer number. I don't have the exact number at hand, but I said, I don't have a specific number either that we are targeting. There is still a number of companies that we don't really think fit in the generic portfolio and that don't really meet the criteria. So we are continuing working on quality cleanup or this focusing ambition. So sorry, but no real number, but a continuous effort. All right. Yes. And on Betterment, you mentioned launching chatbots and smart data and etcetera. And of course, you have a vast growth opportunity in the local market. But are there any plans for geographic expansion? Bettman, thank you, Elias. Bettman, Chris, do you want to pick that one up? Yes. So as you know, the U. S. Market is somewhere near a $30,000,000,000 to $35,000,000,000,000 asset management market. So there's a lot to go for there. And there is real competition there, so we need to keep our eye on the ball in the U. S. I think the company continues to get a lot of inbound from potential partners in other parts of the world who wish to leverage its brand and its software, its IP. It hasn't gone down the track of really deeply exploring those, but there may be a potential in the future. But I think it would need to be customized locally and it would likely be a partnership with a local player rather than an organic greenfield start up. All right. And a question on your accounting. The majority of the value change in the quarter was due to accounting technicalities than fundamental development of the companies. Maybe you can comment some on why you mix in Global Fashion Group, for instance, the different valuation approaches of lost transaction value and the other approach? Yes, sure. It's a good question, Elias. You know that we have been talking about liquidation preference and the technology or process around that. So I think that's fairly well understood, I think. What we've done with GFG more and more over time is that we have I mean, as you can appreciate, due to the different markets we operate in and the different circumstances and conditions, we have more and more looked into, call it, some of the parts approach of Global Fashion Group from the valuation perspective. And when we then have if we take the overall framework for how we value our companies, then if we have a transaction value that is on arm's length and fair and a good measure for our shares in that company, then the rule is that, that one should be used. So when applying a more sum of the past approach taking into account the local circumstances for each of the global fashion businesses, we then have a transaction value for Namshi, which we then take into consideration and actually use for this quarter. So and then what the technical explanation is that when then Namshi continues to perform and improves and have the sales growth, then obviously that then leads to that the NAM achieved value that is a higher discount towards the peers or against the peers. That's kind of the technical explanation behind that. Was that clear enough? Right. And maybe just a follow-up on the reporting. You have discontinued the fair values and implied values from latest transaction that you have maintained up until the Q2 report? Maybe you can give us some about your thinking about this. Can you say again? Yes. So in reports up until the Q2 reports, you used to have a table called fair values and implied values from latest transaction. I got it. Okay. That has been discontinued. Yes, yes, yes. No, I got it. Thanks. Yes, I think what we discussed back and forth was whether that was adding value or actually misleading. I think we referenced that or we introduced that table a number of quarters ago when we saw the rising with a trend where we had a lot of transaction values that were actually substantially higher than with our we So we wanted to be very transparent on what the latest transaction value was in those company compared to the fair value that we used in our NAV. And that was also discussion at some point in time where people compared tried to compare the methodology used by other shareholders in our company and our methodology. We think that, that has a little bit played out its role because many of those transactions values are actually too old to be relevant to reference. So we thought that on the margin, it could be more misleading than helpful. So that was the real reason for why we choose to take it out. Yes. So you see my point here right, because you used this approach in Global Fashion Group, but you have discontinued this approach that you have used to have on a broader basis. So that was my question really. Yes. But no, I don't really see the point to be honest. All right. Well, we can leave it at that. Thank you. Let's talk about that offline. Yes, we can follow it up separately. Thanks. Thank you. Thank you. The next question we have received comes from Mr. Magnus Grohmann, Handelsbanken. Your line is now open. Thank you. To start with, I also have a question regarding valuations. I mean, for GSG, you now value it at a 46% discount to the peer group, while losses are now reducing quite rapidly in GFG and margins are approaching breakeven point. And if anything, comparative margins in the peer group has actually come down slightly recently. So the gap is closing. And maybe you can give a comment there on how come the discount to the peer group is actually expanding sequentially despite that? Yes. Thank you, Magnus. Yes, I mean the explanation is a bit the same that I gave to Elias on Elias' question. I mean, this quarter, it is mainly due to the Namshi that we have a transaction value there. If we wouldn't use that, then the discount should probably have come down a bit. I think that we are on a journey where profitability and growth is progressing well. I don't think that it's fair to say that discount should disappear if the company showed the same traction or same growth and profitability as our peers because we do operate in more risky markets where capital comes at a higher cost than the markets where Zalando, for instance, operates in. So I think you should expect some kind of discount. But hopefully also, I think we should all expect that the discount should come down as these companies make further progress. The last part was actually my follow-up there that you spoke about, which is the interesting part of the question, namely if GFG would turn, say, EBITDA margin of 5% and grow top line by 25%, aligning with the peer group, then what kind of discount level to take into account this higher risk profile that you mentioned do you think would be, in rough terms would be motivated? Is it 10%, 15% or is it 30%? Yes. I mean that's pure speculation, which I shouldn't go into, I think. But I think that if we see a good continued performance by the companies, I think the value discounts probably should come down. But what we do as well and what you can see in the market is that we get more and more reference points on valuation of public e commerce businesses in these regions. So what we do, do not only that we look more on a kind of a sum of the parts, have the sum of the parts philosophy, we also look more into those regions and try to gather as many benchmarks or information points as we can to make a better assessment of the discount. So we are working harder and more deeply into those regions and try to figure out what's a reasonable discount. So it's not only profitability and growth, but also the local how the local market behaves anyway. So if we look at Brazil, Russia and so on and what those markets look like when we make the assessment of the discount. It's difficult to be super transparent because but we try to do this as good as we can. The way to be transparent would be to just present the peer group straight out, flat out with these local peers that you talk about. But anyhow, thanks for that. That gives some additional color. Then on Cliro, you mentioned Cliro in the presentation briefly. I mean, there's been a lot of speculations about a potential Amazon entry into the Nordics recently. To what extent do you believe Cliro would be affected by such a move? Yes. I think that's a question probably better to address to or send to Cliro, the Cliro team. But I think, I mean, Amazon is a big player. So anywhere they move in, it will have an impact probably. In Sweden, the penetration online penetration is also such that it will probably have an impact. I haven't thought about and I am not trying to quantify the risk of it. But so yes, that would probably be an impact. All right. I have a final one for you, Joakim, on investment activity. Do you think it's fair to assume that we will see a pickup in investment pace in the coming year compared to this year? Yes. I mean, we are extremely active on looking for new exciting opportunities. Then as I mentioned, we've executed 2 or added 2 new companies to our portfolio and then made some follow-up investments in existing companies. We will continue to be very active. We will continue to look for new Then to give a number is not really relevant. We need to find the right the right Then to give a number is not really relevant. We need to find the right companies at the right time. Sure. Thank you. And then for Chris on Quikr here and their position in India. I mean, if you compare to OLX on, say, unique monthly visitors, how do they compare? And could you also maybe give some further flavor or color on the profitability development in Quikr apart from recording a strong gross margin? Sure. So I think it's important to say that Quikr is quite a different business in many respects to OLX today. So we compete in the goods category, the C2C category. And to some degree, we compete in the auto category. But we don't really compete in our other categories, including services, jobs and property to anywhere near the same extent. So the key competition market against them is in goods and in auto. So we see our business with strengths across effectively 5 verticals, while we see them very focused on C2C. And then their playbook is obviously to drive the C2C, then attract the B2C and to drive the C2C, etcetera, such as that flywheel that we've seen in markets like Sweden and other markets. We don't think that market that, that approach is necessarily the right approach in India. We think India looks much more like China and the way that market is developed. So it's a slightly different approach to begin with. Secondly, I can't disclose what their UMV is versus our UMV. I think they will likely also see an uptick through the penetration of 4 gs networks and clearly what Reliance is doing in terms of making that available to more customers across India. I think in terms of profitability, we look at profitability obviously by segment or vertical rather. Some of our verticals are effectively profitable and then some are a long way from profitable. It won't be that much of a surprise to you that the least profitable segments are the ones where we have most competition and the most profitable segments are the ones where we have least competition. So it really depends about where we see the opportunity to make returns and invest And we flex our investments across the various verticals according to that. But I think you can assume that broadly, gross margin is trending upwards. It's not yet at a level that you see in the West, but it's at a level that clearly represents a classified developing classified play rather than an e commerce business or other type of business. All right. And then on Babylon, can you give us an update on the status of its major customer, Citigroup? Is that contract still live? Then maybe you can mention a bit more about other important companies on the kind of customer list that you brought in recently. Yes. So if you think about Babylon's business model, there is the B2B business, there's the B2C business and obviously, there's the B2B but to the large payer business, which is to the NHS in the UK, right. So there's 3 different streams. The one that I highlighted and that I think ultimately is going to be the most important in the UK, as we've seen in Sweden, in the delivery of digital health is the state payer. The NHS represents 90% of the U. K. Payer market. So it's a very large entity. And what I focused on was this initiative, which I think is really the first of its kind globally, where Babylon is contracting with the NHS to deliver for those individuals that want to opt in a full GP service in certain areas of the U. K. To date. That includes, obviously, access to the app, access to telemedicine, but also access to physical visits. So it's effectively a vertical integration between the analog and the digital. So that is very interesting. That solves a lot of problems, we believe, in the U. K. We can obviously triage such that doctors only see the people they really need to see and focus their time and efforts on those consumers. And we think that has the potential for very quick growth if and when we can roll it out further with the NHS. But we have to be cognizant that as an innovator, Babylon is not going to come into that market and move extremely quickly in a very linear fashion. There will be barriers to overcome in its journey with the NHS, but that is the highest potential market in the U. K. Given its size. We continue to plow along with the B2B partnerships. Citigroup is still operating. It's been renewed. There are other partnerships that are coming on board, both with corporates but also retailers. We've mentioned in the past, pharmacies are very keen to partner for obvious reasons. So we continue to work that business and that is a much more visible business in terms of just every month cranking away at the sales leads and building the pipeline, while the NHS, I think, has much, much bigger step change functionality in it, but is more unpredictable. Is that helpful? That's very helpful. And just a final one on betterment. You mentioned here assets under management is up at is up at $10,000,000,000 or $11,000,000,000 But to get a broader sense, what scale roughly in terms of AUM do you believe is required to achieve profitability for betterment? That all depends on what our aspirations are in terms of being in the leading I mean, I think, Sinovik came into betterment not to build a small business, niche business, in a corner of the advice market. We wanted to help the management team build a really transformational company, a category defining company. I think to be that sort of company, Betterment needs to get to $50,000,000,000 $100,000,000,000 of assets under management. I think at $100,000,000,000 of assets under management, you become a really, really meaningful player globally in the advice market. I think profitability will likely not be for a couple of years here. So you can probably extrapolate our growth and come to your own conclusion where that may be. But that's partly because we want to go after the big prize. And I think this is not the time to push for profitability. This is the time to drive the growth. Remember, we've already gotten any 300,000 customers. The lifetime value of those customers is enormous. The payback over lifetime is therefore very significant. So we just need to keep growing at this point rather than kind of pulling back. If we pull back, we could make our existing customers over time very profitable. The gross margin on these on the businesses is very, very high indeed. But we have to build a customer base and with the payback is over a period of time. So that's why we're continuing to invest. Thank you. The next question we have received comes from Derek Le Libertiere, ABG. Your line is now open. Okay. Thank you very much for taking my questions. Most of them have been answered already. But I was wondering, since you mentioned that you apply a bottom up approach for valuing GFG, I was wondering if you could give some flavor or a short breakdown of which of the businesses are trading at the greatest discounts and which at the lowest? And is any of them trading at or not trading, but valued at a premium compared to the developed market peers? Thank you. Hi, Derek. Thank you. Well, we have chosen not to show all those details, but you can assume that different markets then have a different cost of capital from the start. So that's well an indication of how we think about it. So sorry, no, we agreed on. Okay. And do you have any estimate of when you expect the group to breakeven on EBITDA level? No, we don't guide for that, unfortunately. The next question we've received comes from Mr. Jochen Gunnell, DNB. Your line is now open. Thank you. Hello, Jochen and Chris. I have one follow-up question. I mean, regarding the valuation of TFD, you have been very distinct about your view about equity risk premium towards emerging markets. But in today's discount of 46%, can you give provide any ballpark split between what's emerging market focus and what's financial characteristics, so to speak, in the discount? Thank you. Hi. Thank you. I think I remain boring and say no. I would prefer not to break it up in more details. So sorry for that. Let's do it like that. And moving on then, could you please provide an updated view on the gap in dividends received and dividends paid going forward? I mean, just a week ago, we saw Com Hem, because it was an increase over the cash activity then. Yes. That I can answer. I think I'll try. So for this year, we had before making the Com Hem investment, we had a GAAP of SEK350 1,000,000, so negative. Then if you add Com Hem, they paid to us this year and now quite recently DKK 2 per share, so DKK 4 per year for this year. Now they said they increased it by 50%, so up to SEK6. So it will that as such will then obviously reduce the gap. Then we also saw some positive comments or heard positive comments from Tele2 on their dividends and their due to their strong performance. So we'll see what how they think about it when they communicate their Q4 and their dividend proposals. But I think a few of these companies, I mean, we look at the consensus forecast. And if you do that yourself, you can see that the dividend gap will be there for probably for some years. But then hopefully, the performance of the companies will mean that the dividends should come up and the gap should come down. We are not super focused on it because we think it's not a big concern to us based on the low leverage we have. And I mean, even if we go €300,000,000 €400,000,000 €200,000,000 negative during the dividend season, which we have done for some years now, I mean, it doesn't really mean a lot in the overall picture and leverage the leverage policy. Thank you. That was very clear. One final one then. In your core listed holdings, you hold an average of 42% of the votes, if we exclude Com Hem, where you hold 19%. Would you say that the ownership level in Com Hem is in line with your long term ability to exercise the active ownership, which we have seen and experienced in the other TMT assets? Yes, I think so. I mean, we are the largest shareholder by far in Com Hem as well with that level of ownership. And I think that's the ambition. So we want to be the lead shareholder in our companies. And we have a very good dialogue with all those companies, including Com Hem and it's not really down to if we own 18%, 19%, 25 percent or 48% of the votes. But we are the clear lead shareholder, which is important for us. Thank you very much, Joachim. Thank you for the questions. Thank you. The last I've got a couple of follow ups. Just firstly, if I may, on betterment. You talked about the competitive positioning, obviously, for long term ambitions. I'm just wondering, as segment becomes even more mainstream, to use your phrase, how you see the competitive dynamic evolving? And I guess, very specifically, how you see the funding requirements for betterment evolving? Is this an asset which you think is probably going to require multiple further private rounds of funding? And maybe you can give some thoughts around and how that might evolve. Yes. Chris, over to you. Thank you, Joakim. So I think when we looked at this funding round, we looked carefully at obviously the requirements to get the business to profitability. And we took into account where we are in the cycle as well and when we thought about that. So we are hopeful that this funding round is sufficient to get the business to profitability. The business has well, well over 100,000,000 of cash post this funding round. So it is well capitalized, and we thought it's well capitalized for a number of years. In terms of the competitive environment, it is becoming mainstream. Clearly, as you all have noticed, the incumbents, the likes of Vanguard and Schwab and others, have launched their own robo offerings. We would consider them to be somewhat me too offerings that don't offer the full product suites that the likes of Betterment do, however they come to the market with existing customers and existing brands. And so they will be powerful competitors. And that's why I emphasize the importance of continuing to differentiate betterment in the line and as a consumer with great product. So we need to continue to do that. This is not the time to sort of take the foot off the gas on the R and D side on R and D investments. We do think that ultimately, best product wins, it's been shown time and again in this sector. And I think when we look at the growth of the Vanguard's or the Schwabs, all the others that are building robos, typically, they are transferring existing customers who otherwise lead the businesses or DIY customers that they're moving across to being advised customers. So they're not getting a lot of, if you will, of new to advised customers growth from outside of existing networks. I think that the bulk of new to advice customers are coming through to the likes of Betterment and the other independent digital advisers. That's really helpful. I suppose my concern, maybe you can help me, is what happens when those 2, for instance, those 2 large players sort of throw full weight behind it, mainly in terms of marketing. I appreciate you're in control of your R and D development, but what happens on the marketing side? If this really does sort of start to shift and gather a lot of momentum, is that an area where we could see a sort of surprise in terms of increased investments required by investment? Absolutely, it's possible. I mean, the way we look at it is they have businesses that they don't want to cannibalize that are higher margin businesses in many respects. And therefore, it would be somewhat perverse for them to market heavily their least their lowest margin business. You would expect them to go out and market most aggressively the highest margin business. So if they're willing to cannibalize their own core businesses, which is the bulk of where their profitability comes from and obviously drives their earnings forecast, then that's entirely possible. I think more likely, you'll see them grow those businesses over time to suit their customer needs. But I doubt they're going to be at the forefront of trying to drive new customers to those businesses. Just a further question on your perspectives around the investments. You mentioned, obviously, H1 was busy, Q3 was less. So I'm just wondering if you can give us some color on the general competition for investments and valuations as you've been active, as you say, looking at the private assets around the world? Is it where do you see kind of general private investor appetite at the moment? Yes. Thanks, Chris. And actually, Chris, do you want to take this one as well? Sure. So I mean, I do think we are clearly seen in the public markets at a point in the cycle where asset prices historically against historical comparisons look relatively high. I mean, I think that said, we are in the business of buying growth businesses and we're always effectively paying forward to buy those businesses because we see the long term potential. But I think we are at a point where asset prices are clearly high, even for digital assets. I think that is probably consistent across most markets, both the U. S, Europe and the emerging markets, although at the moment, our focus is more on Europe and the U. S. Than emerging markets for new investments. There's a lot of capital around. I think one thing that we talk about privately and also to investors, I think, is that we do think that Shinobuik is differentiated, particularly from such as the stories that we are trying to build, which are these category defining companies that take time to build and where founders are looking for patient capital, investors that are really willing to dig in and build the business, I think our story resonates extremely strongly. So I think from access to deal flow is not a problem for Sinevik. Wherever it chooses to look, I do think pricing is generally kind of above levels where we would hope it to be at the moment, and that may well cool down next year. That's helpful. And just sort of extending from that then, I mean, if you look at that kind of generally high asset pricing and thinking about your private assets, in terms of their maturity and maybe wanting to capitalize on the relatively full public markets. Is there any sense or can you give an update on where you are in terms of the cost of public funding for some of those businesses, I. E. Taking them public, might get to a place where you'd want to exploit that? And if so, which of the assets that are further down that path? No, if I start at that. I think we are I mean, we are working with all our companies. We have a long term view. And I mean, we don't really we assess all opportunities, all strategic alternatives for all our assets constantly, but I don't think we have a review on that. Okay. Worth a try. My last one, if I can, just on Quikr. You mentioned that the margin and in an earlier question, you gave some helpful perspectives on the mix of businesses. But I mean, can you give a rough time frame on when you think the mine might get towards profitability as you did for on the other assets? Chris? Yes, Chris. I think that is just difficult to predict. I mean, I think we continue to work. It's a competitive market. As you know, from studying the Indian market, the advertising market is still relatively immature. So and I think people trying to sort of speculate when businesses in India reach profitability is probably been a losing game for a number of years. So I think we are committed to the long term and to build the business into sustainable business, as Joakim said. And I think it's impossible to give you any further guidance at this point. No problem. Thanks. Thanks, Lars. And very helpful answers. Thank you, Chris. Great questions. Thank you. There are no further questions at this time. Please go ahead, speakers. Okay, perfect. Thank you very much all for listening and thank you so much for all the questions. As a reminder, we would like to inform you that we will report our Q4 full year results on the 8th February next year. So thank you again and have a nice day.