Let's kick off. Thanks, Björn, and thanks everyone for joining for our Q1 conference call. Björn is joining me for this call. Most of you have met Björn. Björn is my wingman here at VNV, been here for 10 years and does all the things I do, but also builds our NAV, essentially. We'll be a little bit more granular on that starting from 2022. This is the first call 2022. Now, I am gonna share with you a screen which happens like this. I hope you can see my screen now. I'll use this presentation to walk us through this report. All right. Well, Q1, all of you know what we're doing.
This doesn't quite work as I intended it to do. But, anyway, you get the picture. I hope you see the picture. Björn, you see the picture, right? Yeah. Yeah. Okay. New colleagues, I think this is not sort of entirely new, but Björn and I on the investment team have been joined by Adrian's been here for a while, but Dennis based in Sweden, Dan and Tessa in Amsterdam, Sasha based in Cyprus. So that's not new per the quarter, but. You'll get ample opportunities to meet these people. We're planning a physical in-real-life capital markets day this year, and either before summer or just after summer, I'll come back to you on that, and then there'll be opportunities to meet these people.
I thought I'd go straight into the quarter and give you some yeah, what's been going on here. By way of intro, it's yeah, it's a down quarter. There's no other way about it. We're down 60% in dollar terms. This is driven by different things. Obviously our Russian portfolio, we've written down to you know, to nearly zero. That was the Russia-Ukraine portfolio. It's just under 4%. That's gone down to roughly zero for maybe obvious reasons. Obviously, our listed portfolio has fallen with the market overall.
As you'll know, and as Björn will tell you much more about, we have also—I mean, the parts of the portfolio that are not, that doesn't have a recent transaction, we value on the back of a model. That model uses a listed peer group, and that peer group differs from company to company, obviously. You know, typically any part of that peer group or any peer group for any company have all sort of suffered in the sell-down in public markets of late. Hence, that's also a tick down in the portfolio. It's not all tick downs. There's some tick ups, and I'll come back to you on those.
There's also investment work being done, where this African company, Wasoko, is the biggest investment, and I'll come back to that too. In terms of activity over the quarter, we have been active. We refinanced our bond. The bond that was maturing later this year was refinanced with a new three-year bond with a fixed coupon rate of 5%. We increased the liquidity a little bit by not only refinancing the bond maturing this year, but also we took on a little bit more liquidity, which we have in the portfolio now, which is helpful. We have repurchased shares during the quarter.
We repurchased some shares during the fourth quarter and then some more during this quarter. Obviously, the stock has been very weak, and we can come back to some general thoughts about that. In terms of other work, sort of more portfolio relevant stuff, Swvl obviously went public through a SPAC. As all SPACs now, it's traded down post the sort of the first day of listing. As of March 31, it contributed positively, but it has since fallen, and I mean, if you take it on a mark-to-market basis, our NAV, our reported NAV at the end of the quarter, March 31st, was 95 SEK.
This goes down to just under 90 SEK if you take Swvl's market price today. Where we're trading, we're still trading at a 50% or so discount to NAV, which is of course a reflection of that. There's a large uncertainty around long duration markets, I think. All of you will have sort of will be more rehearsed in this than us lot, but I think a prime driver behind that is the sort of the state of the world, especially in terms of inflation, that impact on interest rates and the uncertainty around interest rates and where they will top out.
I think markets now sort of on a very sharp basis is factoring in like 3% short-term interest rates in the U.S., but will that go to 4%? I sort of sense that us being at 50% is maybe pricing up, you know, pricing in even further interest rates sort of levels higher than that. That's very difficult to sort of say given the fluidity, I think that's a word, in markets overall. Thankfully, of course, if we stay on this sort of note, we invest not quarter by quarter, but we invest for typically a ten-year period or we sell when founders sell, and these sort of cycles, up and down cycles, we'll see more up and down cycles before we're done with these companies.
We remain very sort of enthusiastic and bullish about the companies that we have in the portfolio. They're disrupting large markets with the benefits of a business model of network effects, which builds very high barriers to entry on the downside and hence become defensible on the downside, providing very good risk rewards. I think that's just important to remember in days like this. I feel strongly that regardless of where exit multiples may be, you know, we'll deliver our minimum sort of hurdle rate and beyond from. I think we'll deliver our. You know, we get paid at 20% IRR. I think this portfolio will deliver way beyond that from the current NAV.
with a discount of that sort of very, I think interesting upside. On Swvl, back to Swvl, the company is now at least trading. It's got access to public markets in terms of financing, and that's great. It is financed. The company's doing very well. It now has the funding sort of to increase that. I think further, I'll come back to Wasoko a little bit, one negative contributor or in the NAV development this quarter is, of course, Gett, which we've written down to about $60 million position for us, which is the background to that is obviously that, well, first they pulled their SPAC, which I think is good.
SPACs are. I mean, we see the pluses, but they're also definitely the minuses of that. That has us on the back of a model also increasing sort of the discount factor on the back of that. There's a little bit more uncertainty on the funding of that company. Furthermore, in terms of the modeling here, we compare it to a listed peer group, and the obvious sort of peers are the likes of Uber. They've fallen, the multiples have fallen. That's obviously impacted this negatively. Finally, they used to have a business in Russia. They discontinued that business during the quarter because it was negative.
Well, because of obvious reasons for Russia, but also that that was a situation where it was not cash flow positive and hence discontinued that, which is a good decision. But when you apply multiples to, for example, revenues, that has some impact, and that's now also contributed to the company being marked down in the portfolio this quarter. We remain enthusiastic around the company, its business in the U.K. and especially Israel is doing very, very well. Travel is coming back. The competitive picture is very favorable for them, especially in Israel. Their biggest competitor is Yandex. Yandex is of course not in a good position because of also obvious reasons. This market I think is right for now, but it may prove conservative going forward.
We are very active around the company and to see that they navigate this period well. I think also see if we can use this portfolio. Yeah, SEK 95 per share, net asset value end of March. If you mark-to-market Swvl on the back of that, you're down to just under 90. Still a very high discount. Björn will go through the details of this, but before we get to that, I'll just go take you through some other high-level comments. Portfolio structure-wise, due to the fact that Babylon has also followed sort of tech markets down and fallen, we remain very sort of constructive and upbeat about this company over the long term.
I think there's a lot of upside on the table from where it's priced now in public markets. We price it quarter by quarter to public markets, and that's had its fall to become only the second-largest position in our portfolio at 12%. Voi is unchanged in our portfolio and hence has become the largest position in our portfolio at some 18%. Now, I think this warrants some comments. I did try to sort of talk about this in my intro to the quarterly report. From a distance, I can sort of sense people raising their eyebrows and saying like Voi unchanged when markets are doing like they're doing.
For example, you know, from a distance also, GoPuff and Bird falling like it has in the SPAC market. We feel strongly that the mark we have for Voi, which is based on a transaction that we have a recent transaction in the company, but it's also further supported by the modeling work we do. That we feel that is the true picture for this is a reflection of that the company's just doing very, very well. During the quarter grown significantly in terms of operations, revenues, rides. It's up 140% year-over-year.
Furthermore that it's added licenses and as you will all be familiar with this, in Europe especially, this business model is operated under licenses from city governments. It picked up maybe the most attractive license in the world, being the license to operate this platform in Oslo. Oslo is the best market for these e-scooter platforms in the world in terms of profitability, driven by number of rides per day, usage, et cetera, et cetera. Hence also maybe the most competitive place on earth.
Voi just sort of sweeping the table with all competition and coming out very much on top in that license is, I think, a very good indicator that the company's very well set up to continue to be the leader of this space in Europe. It also attracts a lot of attention, so that license is a very big sort of milestone for the company. During the quarter, they also picked up other licenses in Scandinavia like Trondheim, Frederiksberg, and it continues to sort of be the largest player in Europe. I mean, if markets had been unchanged, this would have definitely been revalued upwards.
It's stable now, which is, if you will, a downtick if markets had been sort of stable. That's a brief sort of background to why the company is why we carry it at the level we're carrying it at. This sort of sector division here is roughly the same. Mobility is up to 50% for obvious reasons. I mean, for the reasons I just mentioned. Marketplace and digital health are still there. Developed markets remains the largest sort of geographical presence that we have, although there's a lot of work being done also in emerging markets. Three companies in the portfolio listed now.
Being listed is of course a drag on the NAV, but it's that we'll mark our NAV in terms of those listed companies from where they're trading at the end of each quarter. It's also positive in that it provides some ability to liquidity. The only one that we have sold of the liquid ones, so the listed one is Hemnet. We still have a large position of Hemnet in the portfolio. That's in some sort of exit phase, if you will. Where Swvl and Babylon, we think has a lot of upside from where they're trading and are not on our sell list despite them being listed.
I think I've spoken to most of you about this, but our sort of, our thinking in terms of listed versus unlisted, we are investors into unlisted assets. I mean, we get involved way before they have any ability to list and, typically, right, we use our permanent capital so we can invest at very early stages. You should not expect us to be investors into listed assets. That's not what we do, although the pricing of some listed assets I know has some of the best investors that I know of in the VC space, you know, starting to focus only on listed assets right now, rather than unlisted assets. Us being public, we ourselves is a different story. Our shareholders, you guys can invest into listed equities yourself.
We won't invest into that. We don't have to kick them out on the day that they become listed, especially if two boxes are checked. One is that we see a remaining upside that sort of exceeds our minimum hurdle rate of 20% per year, and if we remain close to the company's board seats typically and have larger visibility into the operations. Both of those boxes are very much ticked for Swvl and Babylon. Hemnet maybe less so, and hence sort of the logic of that having been sold down a bit in previous quarters. There's a lot of activity in the remaining part of the portfolio outside of these largest names.
What I thought I'd get to a little bit is to talk to you about the two new investments. One new investment which is Wasoko, used to be called Sokowatch. We had a small position in this in the portfolio pre this quarter, where we upped our stake in a round which we were the single biggest investor, but Tiger in their partnership with Avenir led the round. We have become a larger shareholder in the company. We own 4% as of today.
It's the leading B2B marketplace in Africa, essentially being the marketplace between the corner store and the likes of Unilever, Johnson & Johnson, Procter & Gamble, which previously or still is basically inhabited by many middlemen, which makes sort of the operations of the corner store very difficult. Replacing them with this kind of model gives the merchant on the demand side of the marketplace a completely sort of different sort of operating environment where they can sort of plan for product, when they're delivered, how they're priced, et cetera, which is not possible today. This is an enormous market. This is $600 billion retail sector across Africa, which Wasoko is the leading player to dig into.
It's just growing a lot. It's really fascinating to see how emerging markets like the countries that Wasoko is active in, Kenya as the core and the neighboring countries, are now providing sort of ample ground for these kind of companies which are becoming large digital companies just basically from the fact that the infrastructure of mobile connectivity is now present in a way where you can build these very large profitable companies. I mean, this is yet to be profitable, but it's on a clear track. Unit economics are very strong, and we are very excited to be a larger shareholder in this company.
The other one which I thought has contributed positively to the portfolio in this quarter, just also focusing on those, not only the drags, but HousingAnywhere has been in our portfolio for quite a few years. That's been small, and it's only now sort of starting to get to size where we notice, you know, or you know, where it becomes a potential contributor to important contributor to the NAV, and hence the share price in the shorter term. We own 30% of this company, now valued at some $40 million. This is essentially an Airbnb for medium-term rentals in Europe.
The pricing of it now is a reflection of that. There was a round down, basically now, that was done on the back of the companies continuing to consolidate the market in Europe. They bought their largest French competitor, and this is on the back of buying their largest competitor in Holland. This is a Dutch company. So it's really starting to become the only player with this very sort of asset-light marketplace, really Airbnb type of model, which we think is very interesting. It's got a lot of tailwinds in terms of this rental, the whole rental space is moving online.
Airbnb has of course been a big sort of provider of visibility into that. Also, the other sort of interesting aspect of this is that the total addressable market is just enormous. I mean, if you look at Europe and U.S., across those two, you're looking at trillions of dollars, but only in the markets where HousingAnywhere is present. This is a market that nearly gets up to $50 billion if you include the payment solutions that they are helping their markets to address. What else? I think, yeah, the only other two things I thought I'd mention is also that BlaBlaCar, of course, is down a bit on the quarter.
It's down a bit because multiples that we use. You know, this is a model, based on a model. Björn will come back to that. Multiples have come down. I think it's important to note that, yes, they have operations in Russia. Now that's essentially marked to zero. That downtick is basically neutralized by the fact that this company is just doing super well in the rest of the world. That's a reflection of that. Obviously, petrol prices are high, and there's a large incentive now across many of our companies, but very visible in BlaBlaCar from customers to sort of become more efficient on the transport. This is obviously car sharing.
To share the cost of the petrol has become much, much more important. It's getting BlaBlaCar a lot of traction. You see sort of, you know, going away from fossil fuel transportation is also obviously benefiting the likes of Voi and Gett. BlaBlaCar, this is specifically sort of interesting here. The other positive contributor during the quarter is Booksy, which I think Björn will come back to. I think I have enough rambling from me, and I'll hand over to Björn to take us through, you know, the buildup of the NAV in more detail.
Thank you, Per. Yeah. I'll go through the NAV buildup and the main movements during the quarter. Just wanted to remind everyone that if you want to ask a question, the easiest way is to use the Q&A function here in Zoom, and we'll go through that in the Q&A following this short piece from me. Going down the portfolio size-wise here, Voi, as Per mentioned, unchanged value based on the latest real equity transaction that was completed in August 2021. This is supported with our internal valuation model, and as Per touched upon, of course, you have negative impact from the market volatility and peers in general.
Given Voi's strong performance, that model comes in line with that last equity transaction, which we deem is the best fair value estimate of Voi as per end of March. Big negative contributor to NAV is, of course, Babylon, listed, that has continued to see weak trading in the market, which is down some $84 million for our position during the quarter. Swvl closed up first day of trading, which was on March 31st, so positive $60 million. That seems also similar or relevant to other SPACs in weak trading in the recent weeks. Barring a rebound in the share will have a, you know, further negative effect on NAV during this quarter.
I'll come back to the pro forma now if you adjust for Babylon, Swvl, and Hemnet who are the listed companies in the portfolio. BlaBlaCar, based on our typical EV/revenue model, is down some 14% over the quarter. Here again, the main drivers, lower peer multiples, adjusting out the Russia exposure that they had. While on the positive side, very strong demand coming from high gas prices across other markets. Gett, again, Per touched upon, also held at the EV/revenue model, large fair value change during the quarter. Of course, that is mainly driven by the pull of their SPAC listing plans and overall market volatility and compressed peer multiples.
Finally closing of their Russian business that as per year-end 2021 accounted for some 14% of their direct gross profits. On the positive side, we have Booksy, which last quarter we still held on the last equity transaction that was done in October 2020. So rather old real transaction. Now moving this to a model, and despite that peers are down, the company's strong performance since October 2020 and outlook for this year and beyond more than weighs up. So Booksy is a positive contributor with some $40 million during the quarter.
HousingAnywhere, again, positive contributor with $60 million over the quarter to the NAV, based on a new equity transaction that was completed during this first quarter of 2022 in connection with their latest acquisition. Finally, going to the other equity investments line, which is down $57 million over the quarter. That's mainly Russia specific exposure, which we've written down to nearly zero, 90% compared to year-end. All in all this results in NAV of just shy of $1.2 billion or $10.22 per share, which is 16% down over the quarter. In SEK, that's down to SEK 95.10, which is down 13% from our year-end NAV of SEK 109.60.
Finally adjusting that for the current trading of Babylon, Swvl, Hemnet, and Voi as per yesterday close, we end up at a NAV of some $9.50 per share or SEK 89.30. With that, I think we'll move on to Q&A.
Yes.
Uh-
Thanks, Björn.
... have gotten a few questions here, which I thought I'll kick over to you if it's relevant, Per.
Yeah, no, good to do that. Good that people got this, that the Q&A format nowadays is sort of that you punch in the questions in the chat functions or the Q&A function on Zoom. I forgot to sort of highlight that in the beginning, but anyway, people understand that. Let's tick off the questions, Björn.
Yeah. First question here, this seems like a perfect spot to go for sizable repurchases. How do you think about this, and is there any reason not to do share repurchases from your perspective?
Yeah, that's always on the table and is still on the table now. The only period when we're absolutely not able to do it was when we are restricted for reports, for example, or for, you know, large movements in the portfolio where we ourselves are sort of insiders. That's the only reason why it cannot be on the table. Otherwise, it's always on the table. The thinking is basically we compare all new investments to our own stock price, and it's very difficult to sort of motivate any new investments, when you have the stock trading where it is.
The only other factor is that, you know, we obviously have to balance our liquidity so that we remain able to fund any unexpected stuff that comes out of the portfolio. We balance that liquidity need versus looking at our own stock price. That's essentially how we're thinking about it. But agree, basically.
Thank you. There was another one, but I think you covered it, which is essentially, why would you invest $20 million in Wasoko rather than investing $20 million in the VNV stock at the moment?
Yeah.
Yeah.
Yeah. That's, you know, that we think obviously Wasoko is something that will be a provider of very high returns over the coming years. It's something that we've obviously been following that company for a while as a shareholder, and we're constructive in this round, alongside buying back stock, actually, right? The round of Wasoko closed in this quarter, around about the same time as we were buying back stock. Yeah. As you say, Björn, and I point to my earlier comment is that it's very difficult to find new investments that matches the stock price.
Since that's a possible investment for us, that's very difficult to find something that's more attractive.
Thanks. We have another question on SPACs and Swvl and Babylon specifically. I guess I can do the Swvl part and I'll leave the Babylon part for you, Per, but it goes like this. Could you explain the equity facility in place at Swvl? Equity is expensive for both Babylon and Swvl at the moment. What are the other options they have, and would you participate in an equity raise, if any? Swvl at closing, there were high redemptions, not as high as we've seen on average on the market right now. They were left with gross proceeds of $160 million from that SPAC and the PIPE.
In addition to this, they have this at-the-market equity facility where the full details are available in their SEC filings, but this essentially allows, at Swvl's option, to issue new shares and sell them in the market up to an amount of some $450 million. Given where they're trading right now, I'd say, of course, not keen on using that, but it's safe to say that they can essentially fund themselves if they want to. Do you want to take a more general thought on that, Per, in terms of Babylon and potential fundings?
Babylon traded down on the back of very low free float, and I think sort of a supply base around the stock. The only suppliers of the stock were people I don't think who quite knew what the company was doing. That has then been overtaken by a general sort of malaise in the stock markets, and then in health markets specifically, post-COVID. Their peers, I don't think they're not peers in any other way than they both are operating within digital health, but are very different business models within digital health. The likes of Teladoc, et cetera, obviously down a lot, and that's been a drag on the price.
In the environment we're in now, it's full focus on profitability, right? Babylon is obviously not profitable now, and sort of the very strong revenue growth that they are sort of providing to us shareholders is not something that markets sort of favor right now. It's difficult to sort of switch from quarter to quarter from what the markets are favoring in businesses overall. I don't think that's a wise thing to do. I mean, Babylon is very much focused on taking market share in the U.S. and establishing itself as a large player.
Of course, as we know, we've seen them operate in other jurisdictions like the U.K. They have a product that we see has proved to be able to take out a lot of cost, and we think that will be, you know, over time, be the case also for their very large presence in the U.S. market now, at least in terms of dollar numbers, obviously a very small percentage of the overall market. There's remaining growth, but that's not being sort of priced favorably by markets now. That's another reflection that's maybe not connected to the SPAC as such. Yes, I mean, if these companies, I mean, we wouldn't invest into, you know, make a new investment in a listed company.
If the listed part of the portfolio needs to fund themselves in the listed market, you know, at too low valuations basically, we will. I mean, I think you should expect us to participate, because that's just simply a good thing to do for us, for our shareholders, in some capacity. That's not been the case, but if that were to happen then we would not wanna be diluted at too low prices. I hope that answers that question across Swvl and Babylon.
We have another question here. Given that you have both listed and non-listed investments, and that listed assets are down massively during the last year, and non-listed assets are not down to the same extent, is it possible to compare the implied difference in risk premia in the listed venture capital market and the private venture capital market?
Yeah.
Is there non-listed discount these days or a premium?
Yeah. One has to be careful in sort of doing these comparisons for a variety of reasons, right? The best companies out there are obviously not in the need to finance themselves because they're also best in terms of planning their liquidity. Where sort of the market, you know, in the listed space may move up and down on the back of large uncertainties for geopolitics or for interest rates, et cetera, et cetera, you don't see the same volatility in private markets because the best companies simply don't come to market. What I would say though, and in addition to that, one has to sort of also.
It's difficult to compare apples to apples in many cases because private companies tend to, you know, not all of them, but most of them tend to issue equity in the form of preferred stock, prefs, liquidation preference, which are not to be compared apples to apples to common stock, which has full upside, full downside. Preferred stock has a more beneficial sort of stance on the downside in that they have liquidation preference. Some prefs have even guaranteed returns and stuff like that. Those instruments obviously carry higher value if they were just pure common stock.
It's not a perfect sort of comparison to make between sort of private markets prefs and public markets with common shares.
Thank you. Another question here on Gett. From today's report, we can see that your ownership in Gett increased from 5.3%, reported in the last few quarters to some 24% now. Could you describe the nature of that, please? Do you want to do it or you want me to take this one?
You go ahead, Björn.
This is essentially a technical reporting issue. We own 5.3% of the total outstanding shares of Gett. But given the different kind of preferred shares and the preferred stack, that Per just was in on general, that's equivalent to that we own 24% of the economic interest in Gett, which we have for the last many quarters. This is just another way of showing that. Essentially economic interest unchanged, but just another way of showing it. We have views on valuation in private markets. Kinnevik's view this morning is that private markets are converging to the public markets. Would you agree?
Absolutely. I mean, ultimately, if you compare the same share class to the share classes in the same sectors subject to sort of company-specific things, you know, a public company should be valued at the same price as a private market. I mean, they're just simply the same. If they're simply the same company, then, I mean, they should be valued in the same way. Hence back to this sort of point that it's, you know, a preferred with downside protection will be valued higher than the common stock, so it's difficult sort of to do comparisons like for like.
Another question here. When you look at the portfolio in aggregate, how much funding do your companies need before getting to cash flow neutral, on average or in general?
Yeah, that's. I mean, many of these companies have an ability to manage their growth and hence sort of slow down growth, extend runway, and even become cash flow positive at the expense of growth. So it's difficult to answer, basically. It's a fluid situation. And we feel we have liquidity even for a sort of bad case scenario where runway is not you know able to last until cash flow positive. We have liquidity and/or means of liquidity to sort of support our shareholding percentages in these companies in you know in the portfolio at large. But there's obviously the very young part of the portfolio will require more funding.
They're not that large, as you know, in the portfolio, so not a meaningful sort of drag on the liquidity we have.
Good. Let's see if there's any other questions here that we haven't already covered. Yeah, no, yeah. A follow-up on that last question. How long can you keep funding your company before you need to raise capital yourself?
Yeah. I mean, our source of funding is proceeds from exits in the portfolio, of which you've seen some, and there's some stuff that's in an exit phase and, you know, that will help us generate liquidity for the portfolio, for our funding needs. Beyond that, you know, we have the debt markets that we've used, and that have provided liquidity that we have at our disposal right now. Only after that, we'll, you know, go to equity markets.
As I think, you know, our view is that we only go to equity markets if we really don't have liquidity and we really think it's in the interest of our shareholders to get exposure to whatever opportunity that we have in front of ourselves, be that, you know, to participate in the further sort of funding of stuff in the existing portfolio, or to invest into new companies. That's been the rationale, you know, when we have gone to market, equity markets to raise funding. Otherwise, the use of the source of funding is as explained. Again, I think we have a good liquidity situation to do what we need to do for the moment.
Good. Thank you. I think we've covered the questions here, and if I missed anyone, please reach out to, you know, either Per or me on email, and we'll be happy to help. Other than that, I'll leave it to Per to close today's call.
Thank you, Björn, and thank you everyone for listening in. Our next report is out in July. We'll see how the world looks then. Again, thankfully, we're not investing to do something on a quarter-by-quarter basis, but to build a portfolio of sort of very high return sort of companies over a longer time. I really look forward to talking to you in July and see where everything's marked at, as of that point, and give you further updates. In the meantime, I mean, please feel free to get in touch with me, Björn, or my colleagues, and we'll also be inviting you to a Capital Markets Day around summer. Thank you.
Thank you.