Welcome to the VEF 3Q 2021 Earnings Call. For the first part of the call, all participants will be in listen-only mode, so there's no need to mute your individual lines. Afterwards, there'll be a question and answer session. Today, I'm pleased to present David Nangle, CEO. Please begin your meeting.
Yeah. Thank you very much. Good morning, good afternoon, everybody, and welcome to our Q3 results presentation. Slides are either in your inbox or in our online service. I'll be going through them as I speak. Just to kick off with a summary of the quarter and recent highlights. I guess what to say about Q3 is it was a busy quarter, like always busy at VEF, but it was busy good. I think a lot of what you're seeing in the Q3 results are a reflection of information that's out there in the public domain from events that we were part of over the last three to four months. I think, you know, top of that list is the recent successful capital raise we did.
We closed that in August, and we raised just above $100 million gross with the support of a lot of our current and new shareholders who came to the party. That was kind of the highlight from a company level over the quarter, and gave us the cash reserve that we need, for the investment mandate looking forward.
Also from a share price point of view and just our trading point of view, it was just nice to be living with a company, an investment company, with a share that was trading at a premium to NAV for a decent period, or probably the longest period since our inception as investors are now starting to look through our portfolio, the names in there, the value creation trends that have been happening and start to put a premium upon those shares given what they see. This is obviously nice for us to see, good for the share price and good for those people who invested in our story both today and in the past.
More specifically from a portfolio point of view, I think, the main highlights obviously was the Konfío raise in Q3, and this is a Series D raise. Over the years, they've raised, you know, $235 million, but the second part of that was done at a $1.3 billion post-money valuation, and I'll get into that in a second. It's our, I guess, our second in-portfolio unicorn, and obviously one of Mexico's fintechs at the front end of what's happening in that country. Specifically, Creditas is our biggest asset, very much on the front foot, both from an underlying organic growth story, which I'll get into, but also from an M&A and partnerships point of view.
Growth is coming from a number of angles in our biggest and best asset, and that's one that we remain very excited about for the foreseeable future. But beyond that, you know, the top five assets are ones that, you know, next three, which make it the top five, Juspay, Jumo and TransferGo. There's a lot of exciting things happening at these companies, and it's more a case for you, the investor, to watch this space. I think we saw something like that with TransferGo raising or announcing its raise of $50 million in Q3, which is obviously a big event for that company and gives it the capital it needs to win the remittance space in its market and area of focus. It's around emerging Europe and the European corridors within that.
A couple of events that we did actually allude to in the last quarter, but were actually Q3 events. One was the BlackBuck investment. That was our third investment into India, our third investment this year. Indeed, it was $10 million into the largest trucking platform in that market. Then on the ESG front, we closed or finalized the redomestication process to Sweden, and that was a process that was ongoing over the last 12 to 18 months. Obviously a positive drive on the ESG front there. Finally, just moving from positives to negatives, we exited Juspay. It was similar to GuiaBolso. Another of our exits this year, it was one where we did lose value in that exit. The company was sold during the Q3, and we did realize a loss.
We had it marked at $4.8 million at the end of Q2, just above 1% of our NAV, and we realized $1.3 million over the quarter, and that's where our mark is at that point. Moving on to slide three, just some highlights on numbers. This is all in the release. But main numbers you need to know from us as an investment company, we now have a NAV mark of $554 million in total, and that's up $165 million year to date. 100 of that obviously is the raise that we did in August. The other 65 is organic.
Then from a NAV per share point of view, in SEK 464, SEK per share, as of the end of Q3, and that's up from SEK 383 at the end of 2020. Looking at the placement itself, obviously it was one of the highlights of the quarter. We did raise just over $100 million. You know what was good about that this time? This is the second placement we've done in the last twelve months. We raised $60 million in Q4 of last year. What was good was just the quantum and the variety of shareholders who came and invested in our story. I look at this with eyes reflecting back five years ago, six years ago now, when we started.
To have, you know, core shareholders like the Fidelity Group, FMR, FIL, Ruane, Coatue, Wellington in the cap table supporting us in our mandate and having new investors like East Capital, Robeco, Highclere coming in as part of this placement, it's just a great testament to what we're doing, the track record that we're building, and it's great to have these quality deep-pocketed shareholders behind us in everything that we're doing. It was a timely raise. We were light on capital. We did try and pick the right time to do it, and we're very happy for the support in the market, at that time. From a NAV point of view, the evolution is clearly up and to the right, something we like.
Once again, if you're taking a long-term view on this, which is what we do at VEF, looking back to 2015, sub $100 million of NAV at market cap. I look at us today from an NAV point of view, north of $550 million. A lot of that is organic, you know, unrealized and realized value creation when I look back at the Tinkoff story and the iyzico story in Turkey. I look at the portfolio today and names like Konfio and Creditas. Then also the red bars in this, the $160 million of incremental capital that we raised from shareholders to put to work both in portfolio and in new pipeline names as we go. Final slide, just looking at the share price and the evolution of that.
You know, this is a story which has gone to a premium to NAV of late, and we are trading above $700 million of market cap. Now we're, you know, we never look at things in terms of size, and we're not paid for size. We're paid to create value on a per share basis. But size is important from a market cap, from a share liquidity, from attracting the right pockets of capital, and that's all come to fruition in our recent placement. So we're very happy with the forces which are working in our favor on this front. Getting a bit more fundamental, focusing on the portfolio itself and some things that are coming down the pipes. You know, I think from the portfolio, the mix now it's a bit more healthy in terms of the capital in.
I guess at one time we will always have conflicting tendencies with cash on balance sheet because it is a dormant asset. It doesn't, it hinders performance from an NAV and NAV per share point of view, but it clearly is a strategic positive. We look to load up on capital at the right time when we see needs coming down the pipes, and we did that in Q4 2020. We put that $60 million to work quite quickly, and in a value accretive way, and we'd look to do something similar with the $100 million we raised, which is still quite recently, two months ago in August. Some of that has gone to work, and notably in the Konfio placement where we gave them $10 million and in BlackBuck, where we also gave them $10 million.
I think it's a more healthy risk reward mix now with cash in the portfolio at just above 17% of our NAV as of Q3. Obviously, that will evolve as we move forward. Creditas and Creditoo are still our two biggest assets. Creditoo more reflecting the valuation of the round they just did, 25% of our NAV and Creditas sitting at 30% of our NAV. Top two assets are 55%. You know, top five assets are about 70%. I'd go as far as to say the top part of our portfolio is in very good health, and we're very bullish on the top five names in our portfolio no respect to the up and coming names, which are smaller parts of our NAV.
It makes us pretty confident in where we're at with our company from a cash position from the top end of our portfolio, which makes up 70% of our NAV. Also the fact that we have moved on names like GuiaBolso and Xerpa. No disrespect, names where we haven't covered ourselves in glory, where there has been some value destruction. They have now moved off NAV effectively, as of this quarter. We've got a cleaner book, good cash position, and a strong top end of the portfolio, which we're very positive with. I'll talk on two companies in this quarter. I'll talk on Creditas and Creditoo because they are 55% of our NAV, and they're hard to avoid. I think from a Creditas point of view, you're all well familiar with the story at this point.
You know, Sergio Furio and his team are at a lot of events with investment banks marketing their story as they move towards a planned IPO in 2022-2023. You know, what I'd say is from their most recent set of numbers, their Q3 numbers, that they put out, what we're seeing is a company now at a core which is growing 3x year-on-year. Three x in terms of origination growth, three x in terms of top line revenue growth. This is a company that raised money in Q4 2020 last year and put out a model telling investors it would grow at 3x. In turn it from our forecasting point of view, we were a bit more conservative.
We were more in the 2-2.5x growth, but they've proved us wrong. They really have delivered, and that's in the core. Besides the core, it's a company which has been adding in, I guess, value accretive lines for the future via M&A. We talked about that last quarter via partnerships with the big one this quarter with Nubank, where they partnered with Nubank, which in itself is moving towards filing for IPO and hopefully will IPO by year-end. Nubank is customer rich, you know, 30-40 million customers. I won't say it's revenue poor, but it's looking for monetization of this, rich customer base, both in-house and outside.
The partnership with Creditas is one where they will look to monetize its rich customer base with Creditas' high unit economics and revenue economics, product base. It's a great match, and we'll see how the partnership goes. It's early days, obviously just started, but there's buy-in from both key founders into this. There's great potential in it. It's the kind of thing that Creditas is adding in, moving into Mexico, moving into different lines all around secured lending and then moving into insurance as well. Just on the valuation of Creditas, it is worth noting, we've had it at the last valuation mark from Q4 last year, for the last three quarters.
You know, we will look to adjust that, amend that in Q4 as we move into the 12-month period since the last placement, as we do tend to do when we look at things in line with our auditors. We did take a good look at Creditas given all the moving parts. Given the M&A, given the partnerships, given the fact that we're going to Brazil next week to spend time with management on the ground, a lot of moving parts in our story, we're gonna consolidate all into a fresh view on the company as we move into Q4. We held it at the previous valuation as of this quarter for now. In Creditoo, you know, the highlight there really was around their placement.
Taking a quick step back, Konfío, like all our best investments, started in a very focused way as a monoline company focusing on small business lending in the Mexican market. Succeeding on the front foot with that core business line, it started to evolve, moving into ERP and payments, both from an organic and inorganic point of view, and is now looking for a full banking license, either from an application or from an M&A point of view. It's been raising capital both to fuel the organic and the inorganic growth successfully, and the raise in 2021, the two-part raise where they raised $235 million in total. We took part in the first part.
We put in about $20 million in the first part in Q2, and about $9 million in the second part, in September of this year. We own slightly north of 10% and of Konfío and it is a company which should be or is on a path towards being the number one digital bank for small businesses in Mexico. We're big fans of that story as well. Just to finally wrap up before I move into Q&A. You know, similar kind of feedback and investment case in the path forward here, but we're feeling very comfortable and very confident with everything that we have and we see at VEF.
Our NAV is reaching new highs and part of that obviously is driven by the value performance of the companies in our portfolio, part of it obviously the fresh capital. On an NAV per share basis we see the growth coming through quarter-on-quarter and year-on-year. It makes us comfortable and confident for today, but also as we look through the performance of our companies for what we can see coming down the pipes tomorrow. I think Creditas is something that we always point our investors to. If you want to know about VEF, at least today, you need to know about Creditas. It is on a path towards IPO. It is compounding from a larger base and we love the compounding effect. You know, I don't think I'm getting carried away when I say.
I used to say this is a billion-dollar-plus company in the making and this very much is a ten billion dollar plus company in the making at this stage. That's not idle chat. We can see the delivery of this company and the direction of travel and it is impressive. You know, I put it in the category of it is our kind of next Tinkoff in the making. But beyond that, like, you know, it's not just a one trick pony is our portfolio. We talked about Konfio but Juspay, Jumo, TransferGo, watch the space. There's a lot of good things happening at those companies all in different geographies. There's a nice geographic spread, as well in there. ESG is important to us.
We're getting our shop in order and direction of travel is very much clear there with the Swedish holdco with our board mix, and our companies leading the charge on the sustainable finance side. A lot of positive momentum on that front. I think, you know, what's coming down the pipes is what you can see in our current portfolio companies. There's an element of forecastability there or prediction and pipeline is healthy. We're back on the road which is, you know, a key competitive advantage for us, has been historically. We were in Mexico. We were in Turkey. We're heading to Brazil next week. One of the team is in Egypt. We're back on the ground with our VC partners, with the portfolio companies that we've invested in, with the pipeline and the ecosystems.
That should shake out the opportunities that we want to put more capital to work in. I will stop there and move the call now open up for Q&A. Please do so.
Thank you. We have a few questions already lined up. The first is from the line of Joachim Gunell of DNB Markets. Please go ahead. Your line is open.
Thank you. Good afternoon, Dave. A couple of questions from me, and then I'll jump back into the queue.
Cool.
Can you talk a bit about here? I mean obviously a lot has happened since December last year and the transaction-based valuation here of Creditas and it seems that you are flirting with regards to this that okay they are growing 50% organically sequentially despite this higher base. I also note that Nubank is on their way to a U.S. IPO here that could lend some value support. Would it make sense to shift to more like market model approach here by Q4?
Yes.
Also on that note, in what way, if you can talk a bit, what you see would a U.S. Nubank listing pave the way also for Creditas?
Yeah. Look, I think to answer your first question in a word, yes. I think Q4 is both logical in terms of everything we see, in terms of performance and moving parts, but also, in line with a 12-month, not hard window, but 12-month window since the last valuation. You know I think we had a hard debate in terms of whether we would do something in Q3, but there was gonna be so many moving parts, Joachim in terms of the number of partnerships and acquisitions that they had made, never mind the underlying growth story mixed in with the fact that we were gonna be boots on the ground in November spending a lot of time with the company. Effectively it was a plan of doing things right, doing things deep.
If we were moving to mark-to-market model away from last round and should there not be another round, we would do it properly at this point. That's not giving an indication of travel of where Creditas valuation goes, but yes, we move to mark-to-market model. I think it's clear to everybody how the performance is doing for Creditas given that they produce their quarterly headline numbers, the direction of travel for what the company is producing, valuation aside. I think on the Nubank side, look, these are double-edged swords. I think one has to be very positive on the Nubank story.
What the value that they've created, they've built the biggest digital bank, you know, arguably in the world, not just in Brazil, taking on the big boys and it could well IPO. They'll file to IPO by year end. Obviously for everything else, fintech in Brazil and the new economy in Brazil, you know you look to that and you want a successful raising. You want them to hit the ground running and to you know be a good market participant. You know it can be a great company but it can be a bad IPO. It can be a very successful IPO. They could price it cheaply. They could price it too richly. You know what we love from investors is that Nubank has been created in the private side, a bit like Creditas, a bit like Konfio.
A lot of value has been created and in markets like Brazil there is a path towards exit on an ongoing basis via IPO and M&A. I think for Creditas looking towards its IPO it definitely is looking at Nubank, its IPO for learnings and Sergio does know David Vélez very well. They probably have similar advisors, you know, on their mandate. There's lots of good learning for where the market's at, their appetite for something like this, the valuations, albeit they're very different companies. But yeah, no, all eyes on this for sure.
Wonderful. I mean, with the recent recap and your I mean, almost $100 million financial muscle now, where do you see the best IRR potential opportunities now? I mean, if you were to call it divide that into more mature proven holdings versus the earlier stage investments and also some comments about the funding needs for particular holdings over the coming six months.
Yeah. Now look, it's a mix. I think we still look at everything with our 30% IRR lens, whether it's in portfolio or outside portfolio. You know, over the years, we've put more and more capital into current portfolio companies because you just have an edge there. You live with these companies, and when they are raising, you know exactly what you're getting if you're getting the right price for return on capital. You know, I effectively see a mix. We put SEK 10 million into Konfio recently, but also SEK 10 million into BlackBuck, a new company, recently. I can see companies in portfolio, most likely Creditas, Juspay, names of that ilk, maybe ones we put small checks into a year ago, like Rupeek or Minu, needing capital.
These are all names that we stay close to, and we are, you know, looking at maybe giving capital depending on valuation and their needs. They're all in the mix. Then on the pipeline front, it really does remain the bigger countries where we see most of the opportunities as Brazil and India. Pipeline's very hot there, and those are countries where we can deploy capital, albeit it's competitive, it's busy. You know, it's the Egypts and the Pakistans probably top of the frontier pile. Smaller checks, earlier checks, if anything, from what I can see right now.
Very clear. That's helpful. Finally, I mean, this is more of a philosophical question, but can you talk a bit about Creditas and Konfío? I mean, they're in early stages of accelerating their respective M&A agendas here. How do you, I mean, in discussions with the companies and the founders there, how do you balance the integration risks here, as I assume culture is imperative here in the startup world while many fintech firms, I assume, take kind of much pride in the purity of their respective technology platforms?
Yeah. No, that's it. It's fair. Look, I think the main thing for us is that the companies themselves don't take their eyes off the prize. You know, what pays the bills today at Creditas is secured lending. What pays the bills at Konfío is, you know, small business lending. Then you look at that, and if the core is well-manned, well-performing, and well-fueled, and has a certain degree of predictability about it, you know, adding on makes sense till you get to a certain size, but adding on logically, the right products, the right countries, and adding on with the right people so you can digest it. Creditas has been great in that regard. The business hasn't really missed a beat in terms of the core business.
I haven't seen a company like it for turning, you know, an idea into a fact, into performance, into real numbers, whether it's organic or inorganic, in such a quick period of time. We'd be talking about something in November, and by Q1, you know, there'd be top line revenues off the product already. Whether they buy it or whether they actually build it. Phenomenal. I think, you know, they've earned the right to do more and more because they keep on delivering. When they start as small with Creditoo, which is a small payroll and acquisition, then they've got more, obviously, more confidence as they go. I think with Konfío, they had a very clear mission to be a broader small business financial service ecosystem, but they had one product.
The opportunities to move inorganically and make a couple of acquisitions to fast-track things just made a lot of sense. The opportunities were there. The price was right. These are slightly bigger acquisitions for what Konfío is on a relative basis, so a bit more digestion on that front as they put everything together. As you say, you know, it's very easy to look at spreadsheets or do PowerPoint presentations and 1+1=5 , but you need to digest these companies, integrate them, and that can take three, six, 12 months before you start to come out the other side and really start to, you know, move on with all the numbers as a consolidated entity. I've seen that before as well.
Thank you, Dave.
Cool. Thank you.
Thank you. Our next question comes from the line of Patrik Brattelius of ABG. Please go ahead. Your line is open.
Thank you. Hi, David and the team. A few questions.
Hey, Patrik.
From my part. Hi. So during the last conference call in connection with the Q2 report, you highlighted that it's not uncommon for companies that are in IPO-ready phase to do a last financing round before IPO in order to increase their flexibility. Do you have any updates for us regarding this topic for Creditas regarding timeline, perhaps if or when that could be reasonable for them and a size?
Yeah. Look, I've no new comment on that front, other than a repetition of the same comments. I think it's a very logical general comment. You know, I'm just repeating something that, you know, Sergio Furio, the founder of Creditas, has said, and, you know, even Nubank, which is IPOing now, did the same, you know, maybe once, maybe twice before it IPO'd, where people were talking about a Nubank IPO, and it grabbed an additional check once or twice because it made sense because the money was on the table, and it gave them internal flexibility and firepower to pick their time for the IPO. You know, I just repeat that comment. I think there's one thing planning an IPO, especially in a country like Brazil, but interest rates are rising, inflation's rising, elections are around the corner, things can get volatile.
You know, the risk reward of grabbing more capital should it be on the table in the not-too-distant future is a very logical strategy.
Okay. Fair. Thank you. Regarding Creditas, they posted very strong Q3 numbers a few weeks ago, and I believe the revenue growth was 233% year-over-year. They also made a number of acquisitions the last few quarters, which you touched upon. Is it possible to split out the acquisitions to get more of an organic growth, to separate it so we get the dynamics of the growth profile?
Yeah. Look, what I'd say is that's coming down the pipes. It'll be clearer in the next quarter, I would say, as opposed to this quarter. You know, to be specific, if I look at Q3 versus Q3 this year versus Q3 last year, we're looking at nearly 3x growth in terms of originations and in terms of top-line revenue. You know, the majority of that, like north of 90% is organic. The acquisitions they've done, you know, on the lending side have no real implication. Obviously, insurance has some premiums. On the revenue side, it's still very small, you know, single-digit % as a percentage of the overall business. These aren't companies which have made a big impact. It's not like they bought growth. The organic growth is still the main driver.
We'll be more specific next quarter, if that's okay. Where the acquisitions have made an impact is, well, one, it's given them a broader product suite. Two, they should be, in theory, key drivers for the future. They hopefully will bring down CAC. Where the customer base of Creditas, it's almost doubled its customer base as a group from 130,000- 267,000, and a lot of that's come from the insurance acquisition. That customer is being brought into the Creditas ecosystem, and that's where the biggest impact has been as opposed to the financial results. At least for me.
Thank you. That helps with the understanding. If we move over to the second largest company, Konfío, are there any discussions there about becoming IPO ready? Are there any discussion to your knowledge about start sharing more financial KPIs publicly on a regular basis?
Yeah. No, no, it's fair. Look, I think the direction of travel is similar to that of Creditas, but we're, you know, probably one-two years behind, and people were asking us the same questions about Creditas maybe two years ago. You know, Konfio is doing a lot of the heavy lifting in terms of capital raising, building the team, bringing in the products, organic, inorganic, and it will be growing behind the scenes for the next 12-18 months. You know, this is a company which should IPO, I think. M&A is obviously there, but IPO is very much in its runway. We're not looking, you know, at 2022. 2023 would be a push. It's probably more likely the 2024-2025 period.
Patrik, what we see with our companies is, you know, we would have got a lot of, you know, not pushback, but feedback from analysts and investors. We generally like what you do at VEF, but we just don't have enough information on your companies. How the hell can we, you know, give you credit for what you're doing or value what you're doing? Creditas starts to come through, starts to report numbers, and our life is easy, because you can see it, you can do your own work. That's starting to happen at Creditas. Konfío should be the same. I'd like to think companies like Juspay or Jumo or TransferGo will be the same.
They get to a certain level of maturity, they get comfortable in their own skin, they're starting to think about IPO, and they start to share more. Until that point, they're a bit more guarded with their information, which I fully understand because they're private companies. It's that kind of tension that we have between what we do, what we can communicate for our portfolio companies, and helping the market understand what we have.
That's fair. Perfect. A last question from my side. We touched upon success stories as Creditas and Konfío. However, you have done some other investments that have not been that positive. Can you talk about a little bit what you have learned and taken with you from the Xerpa and GuiaBolso investments that you have exited this year?
Yeah, no, super. Look, we all love to talk about winners, don't get me wrong, it's my favorite hobby. Yeah, we have made mistakes in that we have destroyed value for investors when investments that we've made. We own those mistakes. We've been very transparent, I think, with what we've done and haven't done at GuiaBolso and now into Xerpa. Look, I think, you know, first and foremost, you know, the GuiaBolso one we talked about in great detail, in the past where, you know, the mistakes there are really on the consumer lending front and building a balance sheet before they were ready without the skill set and the people and building it too quickly.
Once you get yourself in trouble in some of these companies, especially at early stage, it can be hard to unravel, and then COVID hits, and then the second dawn never happens. That was a company that really struggled. Really it was us backing them being strong in one area, which is the PFM, but then pushing into another, pushing it into too quick, and getting it wrong. With Xerpa, effectively, it never really took off. We backed them. It was an HR ERP company at heart, but we were backing them to move into the earned salary advance space, us and a couple of other investors in that part of the world. With COVID onslaught, they didn't really get going with the corporate integrations and traction.
I guess 18 months later, it never really took off. They'd burned the capital. A lot of this does come back to people at the end, people who run this business, people who make things happen or don't. But it kinda got to the point where both them and the company felt their future was better as part of a broader ecosystem. The shareholders and board members around the table agreed, and we exited that business to a company called Betterfly. So I think the learnings always are the people and spending more and more time with the right people at these companies. Just backing companies with very strong trends in a very clear specific area that we can forecast.
I think in both cases with GuiaBolso and Xerpa, there was leaps of faith around areas that they hadn't yet proven themselves in, and hence it never happened. We had nothing basically to put our finger on at the end of the day. Yeah, plenty of learnings.
Very interesting. Thank you so much.
Cool. Thanks, Patrik.
Thank you. Our next question comes from the line of Herman Wartoft at Pareto Securities. Please go ahead. Your line is open.
Good afternoon, Dave. Just a couple of questions from me. I think the majority of my questions have been asked already, but just like coming back to the pipeline a bit here, I think you mentioned that you see kind of a healthy but also a bit more balanced pipeline now compared to before, maybe. Did I misinterpret you there, or can you just elaborate a little bit more on what you see currently compared to maybe a year ago in terms of size and quality, et cetera?
Yeah. Now look, Herman Wartoft, and thanks for the question. It's busy out there. There's a lot. There's a lot to see, a lot to look at. You know, we're in Brazil next week. We're lifting the lid on that again. Not that we ever don't lift the lid, but we got a deeper dive and, you know, the quantum of calls, the quantum of companies, and there's a quantum of quality as well. There's quite a high level across all areas of fintech. You know, so I would say there's a lot out there.
What we've had to do is keep on refining our process, keep on upping our bar because, you know, we're only looking for, you know, ideally the best and companies that meet our high-end, you know, targets in terms of what we want to look for in investments, you know, numbers and soft things aside. No, I'd say it's a very busy environment for opportunities, and we have access to these opportunities. Doesn't mean we've access to get capital in. You know, there's a couple this year. We've done three investments this year, so we're not, like, throwing capital around. It's once or twice. I have two examples, one in Colombia, one in Brazil, where we found a company that we wanted and we got outbid. We got significantly outbid and we stuck to our fundamentals.
We could have easily done five investments this year, and the year is still young. There's still time. We could do one yet, another incremental one, irrespective of what goes on in the portfolio. Now Brazil, Mexico, India, still very much at the front end, still very busy there across all areas of fintech. Egypt, Pakistan, throwing out opportunities generally at an earlier stage. Then we're opportunistic, you know, Russia, Turkey, East Europe, parts of Africa. We'll probably start diving into Southeast Asia before long. It's overdue. Places like the Philippines and Indonesia, it's time for us to catch up on that market.
Yeah, perfect. Just a follow-up there. Could you give just, like, a ballpark figure of how many deals that you are in a kind of a late stage negotiation in at the moment, or what we can expect in terms of new investments or new portfolio additions?
Yeah. Look, I'd say, given the point in the year we're at, I wouldn't expect a new pipeline deal before year-end. Be careful what I say, but I don't think we're at that point yet. Albeit in portfolio conversions could happen before year-end. On the pipeline front, you know, I could easily, you know, name three-five companies across the countries that I've been speaking of that are in that kinda late stage funnel that we're taking seriously. Yeah, and then it's a function of, you know, allocation resources, which is the relative one we want to really look at what ticks our boxes and where we can get capital in because it's obviously one thing wanting an asset and it's another thing getting capital in.
Yeah. Okay, perfect. And then just a final question from me. I was just wondering if you could elaborate a little bit more on this Nubank partnership and, you know, the kind of impact that it will have on the financials of Creditas. So what do you expect there, and when do you think it will show up? I mean, is it something that the company is already budgeting for, or is it something that will come kind of on top of that next year, maybe?
Yeah. Now, look, I think, look, first and foremost, the headline is great, but that's the easy thing to grab on to. I think the logic is very sound, and I think both founders of both companies have bought into this partnership, so it's not being done at a low level. There's buy-in, there's trust, there's history, and there's an element of, you know, the fintechs in Brazil taking on the banks and working together. You know, a lot of that works together. There's you know, there's a serious logic, that the fact that Nubank has 40 million customers, you know, daily active or monthly active customers in app with its cards. You know, Creditas has a very high unit economic, revenue economic product.
You know, Nubank is, you know, rolling out products. It is buying companies for products in various areas of financial services and beyond, and then it's partnering with some product companies that have product expertise, like Creditas. I think there's all the logic in the world in this. They do have, you know, obviously forecasts for this where they've sat down and looked at internal targets for what would be a success from this. You know, is it baked into the financial model? You know, no, I would say. It's not, you know, as in core to that financial model yet. They do have numbers on the side of what they would expect.
Obviously, if you take 40 million customers, then you get a conversion rate funnel of 1%, you have 400,000 customers, and then you roll out, you know, Creditas products. It doesn't have to be 1%, it could be 0.1%. It'd be 40,000 new customers with Creditas products, which has got 269,000 today. That's an incremental 15% of the customer base on top if they just get 0.1% conversion, and it depends on the product. So there's lots of numbers and data on the side, but it's not. It's more early stages, the announcement, serious buy-in, teams working on it, external to the core model projections, and we see where this goes.
Okay, perfect. Thanks a lot.
Super. Thanks, Jeremy.
Thank you. We have one further question in the queue. That's from the line of Joachim Gunell at DNB Markets. Please go ahead. Your line is open.
Yes. Just a final follow-up for them. Interest rates in Brazil have obviously been rising all year. I mean, going into election year next, we have seen how some of these listed names have quite depressed share prices lately. My question was more with regards to the fact that, okay, raising rates as such to tame inflation, does this provide a more quality fertile ground for your like fintech holdings here with the ability to reprice daily versus incumbents? How should we look upon that?
Yeah. Thanks, Joachim. I think it's a whole conversation in itself, and it's probably a whole conversation company by company, in itself. Obviously the ones in our portfolio in Brazil who are involved in credit in some shape or form, whether that's FinanZero as a digital loan broker or Creditas itself, that is a secured lender, obviously watching this space. I think so far the rate moves haven't overly affected business. I'm seeing this in the banks, the listed banks, I'm seeing this at Creditas both from its growth, its ability to fund, the demand from the customers for loans, albeit there is a repricing mechanism going on as we speak.
Obviously, as your funding rates go up and you can change those rates to what your lenders are getting on your far side. It hasn't really affected growth, which is key and hasn't really affected margins because of repricing. At least in the Creditas that we see in our portfolio. I've seen this obviously through FinanZero as a digital broker, and their volumes are growing at a healthier clip than ever. It hasn't really affected them yet. As an overall ecosystem, one have to watch this space because inflation, interest rates, obviously an election next year, one needs to keep control of this and obviously the currency has been going a bit weaker.
As you alluded to, Joachim, you have share price weakness of some of the bigger listed fintechs for some micro as well as macro reasons. You know, PAGS and Stone and Banco Inter and names like that. You know, I guess, you know, I'm very comfortable with what we see at Creditas. I'm very comfortable with what we see at FinanZero and their impact so far of what's been going on. Some of the macro concerns are there, but then I guess in the markets that we play in, they're always gonna be there. It's not a. You know, I think macro risks and concerns are just a, you know, a course of doing business as opposed to, you know, popping up now and then being gone next year and being almost constant in what we do. Hence, I think.
Sorry, I'm rambling on here, but you know, hence we have the long term view on life. Hence we take currency deflation into our forecast when we're doing IRR. We just kind of expect these things to happen as opposed to surprise when they do.
Very clear. Thank you. That's all from me.
Super. Thanks, Joachim.
Thank you. As there are no further questions on the line, I'll hand back to David for the closing comments.
Super. Thank you. Look, thank you everybody for dialing in, for your continued interest and support in our story. Thanks to the analysts for the questions, always insightful, probing and appreciated. Just, you know, as a closing message, we are in a good place at VEF, we're in a good cash position. Our top end portfolio companies have us pretty confident with life and the pipeline is healthy. Look forward to updating you more at year-end when we have our Q4 numbers and as we get into 2022 and beyond. Thank you for your time today.
This now concludes the conference. Thank you all very much for attending. You may now disconnect your lines.