Earnings Call: Q1 2016

Apr 27, 2016

Good morning and welcome to Kinnevik's First Quarter Results Presentation. I'm Lorenzo Gravao and I'm here in Stockholm with Joakim Anderson, our Chief Financial Officer and with Torren Litzen, our Director of Corporate Communications. I hope you will all had a chance to see our report. And in our report, you will have probably seen that we had a solid start to the year. 1st, if you turn to Page 2, our largest operating companies are very much delivering on their plans, sustained growth in e commerce, which is obviously crucial to the future of the businesses and our company and good progress on key metrics in both mobile and media and we will obviously come back to that as we go through the companies in more detail. 2nd, we have continued executing on our investment management strategy very much in line with what we have been communicating to you over the last few years. 1st, we have made 2 new investments in sectors that we have identified as promising for the future. Betterment, leading U. S.-baseddigitalwealthmanagement and Babylon, a promising healthcare digital provider. 2nd, we have increased our ownership interest in our long term priority companies, most notably Global Fashion Group, what we believe to be an interesting entry point to increase our ownership position. 3rd, we have continued reducing the number of investee companies as we will talk about in more detail later on. And lastly, we have established a very interesting partnership with Alibaba for the Lazada investment in such a way that we are de risking in a significant manner our business in Southeast Asia whilst at the same time keeping the upside for an additional 12 to 18 months. And so in summary, a solid start to the year, but quite interestingly an important step forward on delivering on our shareholder value creation commitment, which as you know is not just about creating NAV growth, but it's turning that NAV into cash and then returning that cash to our shareholders. As you know, we are very focused on attracting and retaining long term oriented shareholders, shareholders who do not trade our stock, shareholders who want to own us for the coming 5, 10, 15 years. And to that extent, delivering them cash returns when we have successful exits is a very much crucial part of our strategy. And as you know, we are delivering returns in 3 ways. First, we had a well timed investment in our own shares, which allowed us to purchase $500,000,000 worth of stock at an average share price of $217,000,000 2nd, we are increasing our ordinary dividend to $7.75 per share. And lastly, our Board is proposing to our general meeting an extraordinary dividend of SEK 18 per share. That is what I call returning capital to shareholders on the back of successful investments. Yes, of course, the capital markets both public and private were particularly challenging during the course of the year and that has led to a 13% reduction in our NAV. Having said that, the developments that we have witnessed over the last couple of years and our behavior and strategic and tactical decisions very much validate our approach. As you know, starting in early 2014, we decided to focus on the businesses that we owned and we made no new investments in new companies for a period of 2 years because the last investment was made in quicker in early 2014 and it was followed by the Betterment investment and Babylon investment in early 2016. During that period of time, we really focused on developing our companies, investing very judiciously in some of them and of course focused on reducing the size and complexity of our portfolio and sold Avito for 16 times our money or nearly $850,000,000 in cash, a cash that we are now delivering to our shareholders. And as a result, we feel that as we look back over the last 4 months, but also over the last couple of years, we have very much progressed in delivering on the strategy that we have established and we are now well positioned for the coming months to continue executing on our plans. As you can see on Page 2, we have a very good position to start from and we will continue our process of capital reallocation by thoughtfully thinking about assets that might be consolidated and redeploying capital that we might release in strategic priorities. If you turn to page 4, we are summarized here the performance of our public companies in some cases, actually 4 out of the 5 for the Q1 in the case of Rocket as you know focusing on their full year results. As you know, the top five companies that Kinnevik is invested in are public and they account for 84% of our NAV. And so I suspect that many of you who are interested in Chinevig will have already listened to or read the public reports that have been produced by Zalando, Millicom, Tele2, Rocket and MTG. And so I'm not going to repeat those. I will just make three observations. The first one is our companies are on track and to us that's the most important thing and if they were not on track, we would obviously be open about that as I am sure the companies themselves would have communicated that. Zalando is on track for its full year guidance. Millicom is very much delivering on the strategy that Mauricio and Tim have been executing on. Tele2 under Allison's leadership is executing on its communication transition from voice to data and Rocket is driving all of its key companies to further growth, but more importantly, enhance profitability. And finally, MTG is very much executing on its transformation strategy. So are very comfortable with the progress that the companies are making. The second observation I would make is that as you know, we believe that the value creation comes from growth and consolidation and we are very pleased to see that for Millicom, Tele2, Rocket and MTG, this quarter was an important quarter to demonstrate to their shareholders that they are very focused on capital reallocation, whether it is Millicom exiting the DRC, Tele2 establishing a joint venture in Kazakhstan, Rocket exiting Pizabo and Vladimira Rorja or MTG completing the sale of CTC, you can see that there is a common thread across all these companies, which is a focus on creating great consumer experiences, growing revenues and profits, but also very thoughtfully reallocating capital across businesses to ensure that the prudent balance sheets are maintained and capital flows to the opportunities that have the greatest returns. If we turn to Page 5, I just wanted to give you a flash on innovation. As you know, the lifeblood of our company and of all of our investee companies is innovation. And we are very pleased to see how Zalando continues to reinvent itself year after year to capitalize and in many cases to anticipate the key trends that are taking place in the online world and obviously more particularly in the online fashion world. The world is going mobile. The world is moving to apps. You need to attract and tailor your proposition to new customers. You need to create vertical propositions that protect your business from more focused players. You need to shift to deliver broader assortment without taking inventory risk. You need to embed your business in the social connectivity and you need to personalize your offering. And as you know, Zalando has delivered a fantastic set of initiatives, which are being rolled out as we speak to address these trends. But Zalando is not just investing in the front end, it is also investing in creating a real partnership with its brands and suppliers and fashion partners by ensuring that they adjust and adopt a partnership program that very much serves their supplier base. And so we are very pleased to see how Zalando continuously think about challenging the way they do business and reinventing the business model going forward. And many of these common traits apply to our other investee companies. If you turn the page to Page 6, we have a summary of our 5 largest private companies performance. Starting with Global Fashion Group, as you know because they reported the results a couple of weeks ago, they delivered excellent growth of 48% in revenue during the course of 2015 and continue to invest in driving the growth of their business and started rolling out a marketplace offering which would enable them to increase the assortment, improve the margins and obviously de risk the operations. But as you know, that is a slow process because when you're operating in over 25 emerging markets, you need to find a number of partners who trust you and the best way to establish that relationship in many cases is to start with an inventory relationship and then move to marketplace. Quikr is progressing across many of its key metrics and we've listed here 3 or 4 of their key initiatives and we were pleased to see that an affiliate of Times Group, which is India's largest media group decided to strike a very interesting media for equity transaction that underpins not only the valuation of Quikr, but also its potential in the local market. And this to us is another common theme that you will see in our companies, establishing partnerships with some of the world's leading companies to ensure our businesses do better. Moving on to Bayport, despite many of the challenges that the emerging markets in particular African markets currencies have faced over the last 12 months, Bayport has continued to do particularly well, has secured access to interesting financings that can maintain a low cost of capital, has strengthened its capital base and finally has begin to roll out interesting mobile enabled products because they again are fully aware of the fact that the world is going mobile and Africans are looking to increase their engagement with financial services from mobile. We have that experience from Millicom's great success in MFS, in particular in Tanzania, and we are delighted to see that Bayport is fully embracing the transition to digital. Moving on to Lazada, who also had a very good performance in its cluster of markets, we had an excellent revenue growth. As you can see, GMV up nearly 170%, revenue grow up 80%, but of course the business was investing and is continuing to invest very heavily to ensure it maintains its leadership position. Lazada had negative EBITDA of nearly €300,000,000 last year. That means that the leadership that they are building and maintaining is coming out of price, a significant one. And that is why as a Board, we were delighted to welcome Alibaba, one of the world's largest companies operating in our sector and clearly a very important partner who contributed €500,000,000 to the company and also acquired shares from the existing shareholders to establish an even stronger partnership. And this for us a very good example of our thoughtful approach to building businesses. In some cases, we continue to invest. In some other cases, we attract others who also view this as an exciting opportunity and we'd rather have a slightly smaller share of a bigger pie than necessarily be fixated with a particular ownership structure. Tesco was 1st, Temasek came 3rd 2nd and Alibaba now. This is a good example of attracting world class companies to build great businesses. Finally, our new arrival Betterment, a very exciting company, which has a mission to put the customer at the center and deliver him or her the best financial services products at the lowest cost in a very easy and friendly manner. And Betterment, as you can see from the numbers, despite some of the volatility of the Q1, continued to deliver a very attractive performance and we are very pleased with the exciting plans that John and his team are developing. If we turn to Page 7, this is slightly deeper dive on Global Fashion Group that shows you the very good progress they are making not just on building regions are able to deliver a faster path to profitability. We are very pleased to see that all companies are moving in the right direction and based on our insight in these businesses, we have no concerns that the businesses are on the right trajectory. They are focusing on the right topics under Romain's leadership and the regional team's leadership in every continent around the world by developing some common best practices and slowly but surely developing an integrated approach to brand owners. We continue to recruit key personnel and we will continue to make announcements every quarter about the strong bench that is being built within the GFG companies. With that, I will turn it over to Joakim, who will give you some background to the capital markets environment in which we've been operating, which has been challenging, and also give you a perspective on how we've been approaching valuations later on. Thank you. So on Slide 9, to start with, you can see the general equity markets trends of the last quarter, which is showing us that the larger indices have partly recovered from the heavy fall in January with the exception from the Shanghai Stock Exchange, which has not really traded up again and remains at negative 15%. If we turn to the right hand side and look at the currency development, we see a mixed picture for the Swedish kroner with a depreciation against the Brazilian real and the Russian ruble, more or less constant development against the euro and a small strengthening against the dollar and the Nigerian naira. On the next slide, we show the more detailed development for a select number of peer groups used in the valuation of our private assets. On the left hand side, you can see the price development and similar to the overall equity market trends shown on the previous slide, the year started with a sharp decline, but with a partial recovery since then. Most noteworthy on this slide probably the negative development for the fashion companies with a price decline of 16% over the quarter, which also is reflected in the valuation multiples on the top right on the slide, with a 22% decrease during the quarter from 2.6 to 2.0. However, as this group only includes online fashion companies in developed markets, it is also important to look at, for instance, Vipshop, as shown on the slide, operating in China where the multiple contraction is even sharper during the quarter with a 40% decrease and the sales multiple ending at 1x sales by end of the quarter. If we then turn to Page 11, it not only reiterates the high volatility in the equity markets over the quarter, also for the global Internet index as shown on the top of the side, but also as a direct consequence of this turbulence, it shows that many private investors have had to take quite substantial write downs on portfolio assets as shown on the bottom part of the slide where the average changes in valuation for a number of unicorns are shown. The columns indicates that there has been substantial write downs with 20% to 40% of the value for a large part of them. The second trend on slide 12 that has become very evident in the last quarters, again driven by the high volatility and market environment is the slowdown and scarcity of funding for private investments, illustrated on the left hand side by totally invested VC amounts in the columns, year on year growth in the circles and the number of new unicorns created by the line, all indicators are showing a sharp decline from the peak levels in Q2, Q3 last year. As said on the previous slide, the number of actual down rounds or down exits has also been substantially higher the last two quarters as shown in the green columns to the right. To summarize these slides, it's quite obvious that we are operating under very challenging conditions right now, which, of course, has a great impact in the way we manage our companies with high discipline, continued conservative valuations and focus on our strategic priorities. Back to you, Lorenz, again, for the investment management activities. So if you turn to Page 14, you will see a summary of the investment management activities for the quarter and we've listed here 8 important transactions that we have executed over the last 4 months given that we are giving you a bring down to today. On the new investment side, as discussed previously, we were very pleased with our $65,000,000 investment together with the existing shareholders totaling around of $100,000,000 in betterment, which was completed a short while ago. To us, this is a very interesting and promising company. And if we look at it from an investment point of view, this is what I would describe very much the sweet spot of Kinnevik type investments. We are coming in early with a significant stake and the existing shareholders are very much believing not only in the company but also in the valuation by contributing a third of the financing. This is a balanced transaction at a valuation that is fair to the company, to the existing shareholders and to us, the latecomers, and we look forward to continuing to work with John and the existing shareholders in the coming months years. Babylon is a much earlier investment, thus much smaller. It's a company that is pioneering the development of healthcare applications for consumers, both traditional and artificial intelligence based. And by definition, we are highly focused on taking a very prudent approach to make sure that our capital is invested wisely and not ahead of the consumer adoption of each of these businesses. The most important investment which we are announcing today is the underwriting of a €200,000,000 capital increase by generic as part of a €300,000,000 total raise by GFG and we have partially pre funded that and we expect to invest the rest of the capital during the course of 20 16 Q2. Finally, as I commented earlier, we made an interesting and well timed investment in our own shares, which again is consistent with the strategy that we communicated last year of investing in our own stock if three conditions were met. I think we have spoken already about the exits, just noteworthy to point out that we are continuing on our quest to make our investment portfolio simpler, easier to understand, more streamlined so that all of you investors have a full appreciation of all of our investments. But in all of these circumstances, we are acting very responsibly and we are looking for great owners and partners for the businesses that we do not want to continue owning. And as a result, we are very pleased with the fact that ringier, which is a very established and well respected Swiss company decided to take over our deal day business. And similarly, we're very pleased to see that Future Retail, which is a very established Indian retail conglomerate acquired our fab furnish business. We are in the business of building great companies, but if some of the businesses are no longer strategic to us, we make sure that we look for the best owners to ensure that the people who are building the businesses, the management teams that we have recruited continue to have a future even if outside of the Shinnevik umbrella. The following pages give you a deeper dive on our investments. I am not going to go through them in detail because we hosted a number of calls in and around investments. I just want to highlight a couple of points per page. On Betterment, we are very excited about what Betterment is doing today and even more excited about what they are doing and will be doing in the coming years, which essentially can be summarized in 2 ways, an expansion of the product and service offering for the existing consumers and an expansion of their distribution channels beyond the direct to consumers. And on those two metrics, we will be coming back to you quarter after quarter to tell you the progress we are making. As it relates to Babadon, as I said, it's a much earlier company, but we are very excited about again 2 key areas of focus, the broadening of the establishment of great partnerships whereby Babylon can become the interface between companies that are trying to offer a great health care solution for their employees and the world of healthcare. Coming to GFG on Page 17, I would like to spend a couple of minutes on this because I suspect many people will have questions around this particular investment. As you know, we started investing in the individual fashion companies that have created GFG about 5 or 6 years ago through 2 companies that most of you will have probably forgotten, but we still remember called Bigfoots. And the Bigfoots were essentially holding companies intended to allow these businesses to raise capital to be invested in the various region. And so over a period of time up to 2014, we invested about €300,000,000 in the various operations with the bulk of the capital being invested in 2012, meaning fairly early in the development of GFG. We then received an additional amount of shares in GFG in connection with the Rocket reorganization that took place pre IPO. We started investing again in GFG in 2015 when we led an equity convertible financing round with an investment of €59,000,000 and we continued investing through a shareholder loan, which we awarded the company earlier this year and we are now announcing an additional commitment of €150,000,000 And as a result, €200,000,000 of the capital that will have been investment and is likely to be invested by Kinnevik will be invested at the current round. And so this is a good example of the prudent approach that Chinevig has taken to making its investments, going early, pausing and then reinvesting at the appropriate time to ensure the company has a clear runway to deliver on its plan and get to be a successful established companies that will and is able to go public as many of our other companies are in due course. And we have listed on the right hand side the key features that I have just described of the current transaction. We've commented quite a bit on the investment in the Kinnevik share and the transaction that we've executed with respect to the Lazada partnership. So I'll just make one final observation on page 19 as it relates to the Lazada investment again to highlight our financial discipline and good returns whereby an investment of about SEK500 1,000,000 that was made again over multiple rounds to ensure that we derisked and contributed capital as we got more comfortable with the business has turned into a 2 times multiple of investment capital and 30% IRR based on the current valuation. But of course, we do not know how much the company will be worth in 12 to 18 months and that's why we are putting a question mark onto the future. Could be higher, could be lower. We surely hope that the work that the team will be doing and the partnership with Alibaba will lead to a higher number. And with that, I will turn it over to Joachim to take you through a summary of our financial position starting on Page 21. So starting with the NAV. Overall, as mentioned, we saw the NAV come down by 13% from SEK 83,500,000,000 to SEK 72,700,000,000 of the quarter as a consequence of the general market environment as mentioned earlier in the presentation. The explanation, if you look into the details, was that Zalando was down by 19% of the quarter or SEK5 1,000,000,000 based on the substantial contraction of the online fashion company's valuation. The telecom companies, Tele2 and Millicom, were both contributing by SEK2 1,000,000,000 in total and then we had SEK1.7 billion write down of our private portfolio, which we will come to soon. As of yesterday, the NAV was slightly above the end of quarter level at $74,500,000,000 dollars If we turn to slide 22 and look at the private portfolio, we have this quarter a total write down of 1 $1,700,000,000 as I mentioned and total investments of $1,200,000,000 So in total, the value of the private assets came down by 500,000,000 to 10,200,000,000. The main driver of our write down of GFT as a consequence is a consequence of the 22% contraction of the peer group multiples and the continued market sentiment of favoring developed market companies over developing market companies and profitability over growth. When we put all together for GFG, we are concluding on a fair value, equity value of €1,000,000,000 for oil shares in GFG, resulting in a write down of €1,500,000,000 for Kinnevik. On the more positive side, we have a markup of 5 $33,000,000 on our shares in Lazada following the transaction with Alibaba and we are adding the new investments in Babylon and Betterment. The 3rd and final slide in this section is a summary of the investment activities and the overview of our financial position. So we invested $1,200,000,000 during the quarter, including Betterment, Babylon and our €50,000,000 loan to GFG. We started the year with a net cash of €7,600,000,000 and taking out the investments in the private portfolio and the €500,000,000 investment in Kinnevik shares takes us to a net cash of €5,800,000,000 at the end of this quarter. Back to you, Roelso, for the summary. Thank you, Joakim. As you know, all great businesses are led by great people and great boards. And we're very fortunate that following the extensive work that the institutional investors mainly based here in Sweden together with our support have selected 11 new directors who will be joining our 5 largest public companies. As you can see, we have selected together with the noncom members a great group of people and a very diverse group of people, a group of people who have different geographical experience and exposure, but they all share a passion for building digital businesses. About half of them are female professionals who have cut their teeth around the world, building great businesses and leading great operating units and we're really very excited to continue working with them and begin a new journey for each and every one of our company. I am very confident they will bring experience, perspective and a new energy to our promising businesses. In conclusion, we showed you the slide on page 26 as we established the priorities for 2016. And as you can see for every one of our 9 key objectives, we are very much on track with respect to delivering on our promise. And we will continue to report back to you with a slide to show you the progress that we are making. And so in conclusion, I think there are 2 ways to look at this quarter. You can focus just on the numbers and consider that this was a 13% decline in NAV and ended there or you can look at it the way we look at it, which is to focus on the operations of the businesses and get comfortable with the fact that we are on track. 2nd, you can look at whether we are delivering on our promise of building the next generation of businesses of creating and de risking through partnerships the businesses that are exposed and continue to streamline the portfolio. And third, to ensure that we are building the right bench of talent to make sure that each and every one of our company can live up to its promise, which is one of creating growth and profitability, but doing so in the Shinnevik way with the focus on governance, risk management, compliance and corporate responsibility that you all expect us to be champions of wherever we do business around the world. With that, I would pause and would welcome questions either from people in the room or people on the phone. And as always, we start with questions from people on the phone. And we've got Mia Tilai from BAML on the line with a question. Please go ahead. Your line is open. Good morning. Hi, it's Maja. Thank you very much for taking my question. Lorenza, you said you may consolidate some assets and that you may release reinvest. Could you talk a bit more about your capital allocation plans for the coming months? Thank you very much. Thank you for the question. And I think I can confirm to you that at any point in time over the last couple of years, the Sinevig team must have been working on anywhere between 610 projects, some of which come to fruition after a few weeks, some of which are still very much in the making. And our focus is always the same, which is we look at each and every one of our businesses and we conclude whether it has the right team, the right strategy, the right market opportunity, the right partners and the right amount of capital to win. And if any of those are missing, then we work very hard to fix those issues to make sure the companies are better positioned. And that is our promise to our companies, our own people and to of course our shareholders. When we realize that a company is unlikely to be able to be successful despite our efforts and despite our addressing those issues, then we look for the best opportunity to improve the business. And the solution is, as you have seen in one of the slides, different for every one of the companies. In the case of Millicom and the DRC, the right decision was to transfer the business to Orange to allow them to build a stronger market. In the case of Tele2 and Kazakhstan, the right decision was a joint venture led by Tele2 Management, but with capital invested and the story goes on. And that is the mentality, attitude and approach that we have. We take our time to build great businesses. We take our time to try and improve them and then we take our time to think about what is the best new setup to make them successful and to create value for our shareholders. And so we have just like we've had for a number of years between 6 10 projects going on and of course once they get completed we will announce them and obviously be delighted to talk about them. We have a question here in the room. Magnus Roman, Handelsbanken. So in the annual report, you wrote that you plan to maintain a significant net cash position. Then subsequent, you announced your share redemption program. Would you say that that statement is still valid? We remain highly committed to our overall financial parameters, which as you know have a certain investment plan, a certain dividend policy and a very clear statement of having close to or very little financial leverage. Clearly at different points in time, we might swing from a very large net cash position to a small net debt position simply because that is the nature of the business we're in. We cannot time perfectly the investment and divestments and that is why we as a company maintain healthy credit facilities to manage that swing. If you look at our net debt position, it's obviously affected by the fact that we have a $1,200,000,000 bond outstanding. And so our net cash position is affected by that, but our gross cash position is larger. And so we are because of the business that we're in, because of the fact that we are committed to a dividend which is a growing dividend and as you know probably for still a few years we will have a shortfall between the dividends we receive and the dividends we pay, we will look to maintain a significant cash position. Now the word significant can be interpreted in different manners and clearly right after our redemption program that number might be very close to 0 even negative, but there is no reason for us not to aim to return to a cash position in the next couple of years to make sure that we can deliver on our promise. So one should read that that what you are describing that you see maybe better potential for investments in regards to the climate out there and valuations that that potential should not be affected by the EO or the redemption program decision from your side? Absolutely. Having said that, I just want to manage expectations in the sense that you have to appreciate that we are not asset traders, we are business builders. And so when you are business builders, the most important thing you do every day is to build great companies that are building great brands and delivering great service. And so for us, we have had as you've seen quite a busy 1st 4 months with quite a significant amount of capital being invested And now we need to work as partners to our management teams, founders and managers. And I'm now speaking in particular of Global Fashion Group, which is now a very substantial company in its own right and an even more substantial company for us. And we need to be able to partner with them and enable them in 25 markets around the world. And so you should not think that we are just writing a check and just then showing up at the Board meeting. And as a result, in circumstances like this one when we have made a number of new investments and sizable investment, we redouble our efforts to work with our companies to ensure that they are well supported. This does not mean that we might not make another say 2, maybe even 3 new investments during the course of the year, but the priority shifts a little bit more to now let's roll up the sleeves and work even harder on making the companies better than just chasing the next opportunity. That's clear. Maybe that just led into the GFG question, because it seems obvious that you will contribute more in comparison to your natural ownership share than Rocket Internet in this funding round. So that implies that you should be increasing your stake. But just to make us understand this funding round, if all the other 52% owners would participate with their pro rata share in full. What kind of ownership would you expect Kinvik to reach? And how large would the funding round be then? Obviously, this is a very important question and I would love to be able to give you very precise numbers both in terms of the total capital raise as well as the pro form a ownership that Chinevig will have. Unfortunately, this is a private company and so this is not your traditional rights issue with a defined amount and a defined underwriting that is likely and is predictable because you can look at the 10 preceding rights issue in Sweden for companies of this size and you can map out what Handelsbanken and Nordea funder might do about that company, right? This is a company that is a private company, which has a very solid set of shareholders, who I can confirm that to you today since we announced the capital increase have reached out many of them suggesting that they will participate. Now the Board in conjunction with the shareholders will then need to decide whether we will lead to an upsizing, so call it green shoe style to use a technical word or we will keep it where it is and then we will look at depending on the size of the interest the scale back that Cinevig might take. I think as you know in order to be conservative and to always put out the outcome that is the potential the most significant for us, we have used €300,000,000 which is obviously a high number of capital committed and €200,000,000 from Kinnevik. It might end up to be say 320 with €180,000,000 or something, but it's very difficult to speculate at this stage and that's why we just say this is the framework and then hopefully by the time we see each other in July, I will be able to take you through in detail what the implications are for us. Needless to say though, we will become an even greater and larger shareholder. And if you go back in the history of Kinnevik, this is not dissimilar to the 2012, 2013 Zalando transaction where Kinnevik went from being in the 20s to a 36% stake. And so from my personal point of view, if we ended out somewhere between 35% 40%, we will have achieved the Zalando style increase in leadership in the company and then might get diluted down 3, 4, 5 years from now when the company goes public. So that would be if you wish if you want to talk about history rewriting itself, I think you can look at that as a good template. Zalando was started 2,008, right? And then 5 years later, Kinnevik became the largest shareholder. This company was really started on average to 2011, 2012, 2016, SINOVIC becomes a larger shareholder and then you give it another because these are emerging markets and not developed markets, you give it another 3, 4, 5 years, the company is mature and is able to achieve its own standing in the public markets. That's a very good answer. Just rounding up then with the financials and your view of GHG, because you've obviously explained that the focus is shifting towards profitability. And so in regards to that, would you be satisfied with GFG producing growth numbers in line with their main listed peers in the coming years or do you have higher growth ambitions than that? So the first thing there are 3 key pieces to the answer. The first one is we have to appreciate that this company reports in euros, but probably has no euro sales. And so a very large portion of the outcome of the coming years will be driven by currencies. And as hard as Joakim and I work on this with Torrent support, we have very little understanding of where the 15 or so currencies that are impacting the GFG business will be over the coming 3 years. Constant currency. Exactly. The second thing I would say is that the company continues to deliver very healthy growth rates, But just like you've seen with Zalando, at some point you start tapering the growth from the explosive numbers into more reasonable numbers to ensure that the business has a greater path to profitability. And obviously last year was a very big investment year. This year will be a very big investment year. But then starting in 2017, we will start to see a very clear path to profitability just like you saw in Zalando, few people believed in it, but the company delivered it. I think the it is easier I think to see it here if you look at the page 7 because we are providing very granular information on each of the regions and as such you can see as already communicated by Rocket that a number of the country businesses are already profitable. Again, the story is repeating itself. And as a result, I think you should expect to see revenue growth coming down versus historical rates, but not all the way down to the listed peers, because we believe that this company has and continues to have a big market opportunity. And the capital raise that we are making is intended, if you think about it, to reinject the lifeblood to make sure this company continues to grow despite the adversity. As you know, in life you can be very scared when things are challenging or can look at them as great opportunities. And we view this as an opportunity to accomplish 2 things. 1st, to give the firepower and the fuel for GFG to accelerate its growth and for Kinnevik to increase its ownership to the position that we would like to get to, which is your classic pre Zalando IPO position of say 36%, which is in line with what we own of Millicom as well. That sounds thrilling. Thank you. Pleasure. Elias Bosch, Nordea. Maybe if you can spend some time talking about the allocation of capital within Global Fashion Group. We've heard reports that Salora is shutting down Vietnam and Thailand for instance. We've also heard that Gabon is looking to find a new owner and media speculates at least that they are looking at a new owner. Jabong obviously grew by 7% last year, while the other companies had an average growth rate of about 88% and Flipkart invested $50,000,000 in Mintra and so on. So what markets do you think this capital will be allocated to? And do you think that the Global Fashion Group IPO, you mentioned a time line of 3 to 5 years, would that be possible with the current situation in India? Or do you think you would need to exit India? Thank you. So as we talked about it's obviously a very topical question. As you can imagine, this is something that the GFG Board spends a lot of time on and Romain and Niels and the teams locally spend a lot of time on. And I think as we've discussed with our other more established companies, this is not a one off, meaning every one of our businesses has to look at every one of its operations by region, by business unit, by model and determine whether it has a clear path to profitability and attractive returns and if it doesn't, fix it. And if you can't fix it, merge it, right? I mean that path is very, very clear. And as you can imagine, given that GFG is our largest private company, it invested nearly $300,000,000 of capital last year and it's now our largest private investor. We are going to take that discipline down to every conference room if you want to be as provocative as that. And so that type of analysis, that type of work, that type of soul searching is actually led by the local teams who are saying we realize that our path to profitability requires taking decisions, in some cases adjustments, in some cases partnership, in some cases invest more and that is what's going on. And we are incredibly supportive of that soul searching, which in the case of Zalando is all about reinventing Zalando, right? In the case of GFG is about fine tuning the operations. But please do go back to the comments I made around deal day and fab furnish. I don't like the word shutdown. There is no reason in life if you started an interesting project to shut down. There might be circumstances in which you have to shut down, but that is at the end of an extensive process of having reviewed any and all possible options to optimize the business. I believe every single one of GFG's operation has value. In some cases, it's a huge value. In some cases, it's a slightly lower value. But the value is there because when you invest in building a brand, in assembling a team and the fundamental market opportunity is exciting, there is value. Now you might not be able to afford to exercise all of the options that you have on a business, in which case you might say I prioritize, I reallocate capital and I find partners. And remember that in emerging markets, most companies operate in partnerships. If you think about Nestle, think about Unilever, they have listed businesses in Nigeria and Indonesia. It's the common. This company actually stands out to the opposite as a full owner of all its businesses. And so I would be very supportive if the regional managers and the POP management felt that it made sense to consider partnerships. Now unfortunately, we live in a highly media speculation world, in particular in India, which loves to talk about digital, loves to talk about e commerce and the gossip is just amazing in the country, right? And so if I make a trip to the country, which I did a few weeks ago, then it's all about Kinnevik investing 1,000,000,000 of dollars in India. And then if I don't go for 2 months, then Jabong is looking for partners. I think we have to move away from that, go back to what is our strategy, how do we do business and what type of initiatives we put in place to deliver. And I think hopefully you and our investors have confidence in us that we would do exactly what you would do if you were in our shoes, which is to apply a disciplined approach to investments and of course prudence if we cannot afford to exercise all the options we have. Just a follow-up on that. You mentioned Fab Furnish, for instance. By my calculation, you invested about $150,000,000 in Fab Furnish and and Deal Day. And the divestment that you listed for this quarter was $2,000,000 So is that correct that you invested €150,000,000 and sold it for €2,000,000 So if you look at Page 14, we invested €98,000,000 in Deal Day €57,000,000 in Fab Furnish. And the proceeds that we received from those sales are minimal. And I think this goes to the heart of what Kinnevik is. We're open when we're successful and we're open when we're not successful, because that is how we want to communicate with you and our shareholders. Not all of our companies will be successful. And in some cases, they will lead to sales that accrue very little proceeds. But I can assure you that having little proceeds is better for the company, for their people, for their managers and for Kinnevik than a closure which might cost tens of 1,000,000 and also have a very big reputational impact for us. And I can assure you that the teams at Kinnevik in Stockholm and in London have probably spent as much time on Deal Day and Fab Furnish as they've spent on Betterment in order to find the right solution for these companies because that is our responsibility to do so. And so yes, I would have liked to tell you that that $150,000,000 was turned into $450,000,000 but no, it turns into a very minimal amount. But I must say, I am even more proud of those 2 transactions than I am of other transactions that we might have made because of the effort and energy that the team has put to find the right home for these companies, which is a very different philosophy and approach than many other more, I would say, institutional manager investors. Good. Final question, if I may, on the capital distribution. Did you think about instead of just doing a share redemption, doing a sustained buyback program? I mean, it obviously would take much longer than the SEK 500,000,000, but did you consider that and why did you not choose it? Thank you. So I will give you a perspective. This ultimately is a Board decision, not a management decision. And then maybe Joakim, you can give your perspective as well. We are not in the business of manipulating Shinnevik's share price, right? That is not our business. As you might have seen, we executed a small initial buyback with the sole objective of making a very good investment as opposed to drive up the share price. And I think you will tell me what you think. I think we did a good job. We bought quite a lot of shares without moving the market. We bought just a teeny little bit every day over a long period time. We were managing that kind of every day we would get the report 60,000 shares, 50,000 shares, 90,000 shares and we never moved the market. And so if you think about executing that 10 times bigger, I mean it would take forever to achieve that particular and eventually you might actually move the market. And so it was a much more rational decision I think by our Board to say we want to deliver capital to our shareholders. We want to give them a clear message that when we accomplish such outstanding results as 16 times money on Avito, they need to feel the benefit as well and that's why they made the decision. Thank you. Derik Talbot here, ABG. So just one question for me. I think you partly answered it already, but you started out here in a very active manner with investments notably in Betterment and Babylon, now also committing additional capital to GFG. So I'm just wondering now that you're keeping your net investments guidance for the full year of $2,000,000,000 to $3,000,000,000 I think after GFG finance runs been complete, you would have almost have reached that. So I'm just thinking what's your when you're keeping the guidance, is your outlook that you will have very active investment activity for the rest of the year with both investments and divestments? Or are you seeing more calmer activity for the rest of the year? As a very prudent investor, we take a step at a time and we have teams working in parallel to make sure that we have the ability to finance our investments in a simplification, divesting team does a fantastic job in the next 3 to 6 months, then we will have probably a greater firepower to deploy in opportunities that we that our investing team is pursuing. But we take those 2 in parallel and we will never go and outspend our ability to finance. We feel that that is not what our shareholders want. I don't think our shareholders are expecting us to make bet on leveraging the balance sheet at low interest rates and making high yield investments in a situation where prudence and risk management is at the heart of what we do and we are investing in many cases in growth companies, which as Elias reminded us just a moment ago can result in SEK155 1,000,000 turning into a minimal amount. We are acutely aware of that and as a result we have to take very responsible positions around that. Do you want to ask if there are any questions on the line? Thank you, Richard. Yes. There are no questions registered on the telephone line. Excellent. Well, thank you very much for joining us today. As I said, it was a good quarter. We've accomplished a lot. The markets have not been supportive, but for long term oriented investors, we are continuing to deliver on our strategy and we look forward to seeing you in July.