Earnings Call: Q2 2021

Jul 28, 2021

Welcome to the VNB Global Q2 2021 meeting. Today, I am pleased to present Per Brillios, Chief Executive Officer. For the first part of the call, all participants will be in listen only mode and afterwards, there will be a question and answer session. I'll now hand the floor to Per. Please begin. Hi, everyone, and thanks for joining in. Q2 results, it's that time of year. And yes, we'll dig right into it. I've got my colleague, George, Just going to help me do the slides today. And George, if you could take us to Page 9, And I'll dig straight into just to try to summarize this quarter and in general, A super good period, but also super busy period, which is good. But the quarter is Overall, it's good. We're up like 12%. The NAV, that is, is up like 12% during the second quarter To just under SEK 108 per share. And that's driven by Stuff in the portfolio moving around. And but sort of beyond that, There is, of course, a lot of activity in the portfolio that are happening. In fact, we've invested during the quarter, we've invested nearly $93,000,000 into the portfolio, Where obviously BlaBlaCar, which we've spoken about before, I believe, is at the Q1 results or what happened in Q2. That stands out as the main one. We participated in that funding. We don't talk so much about it at this call because We've already covered that. But we've also and then there's a bunch of names, which We haven't we yet to be able to disclose everything on, and we're waiting for those companies to sort of To get everything sort of settled and do their sort of press releases and upon that, we'll be able to do something. But One that sort of does stand out that we did do during the quarter was Best Doctor. After the quarter, we've also continued investing And there's a couple of new names that have joined the portfolio after the quarter and 2 we described in this report, which is collected foods and tights. And I'll come back to some of those. But I think In terms of news during the quarter, it's obviously nothing's really new as per this report. It's all been press release. That's worth mentioning would be Babylon obviously announcing that they are going public To a merger with Alkuri Global Acquisition Corp. And that's now In motion, going through the process that these facts go through with the regulatory approvals, Shareholder meetings, etcetera, but that's all. We're very excited about that and expect that to be concluded. On a sort of general note, as things go public in our portfolio, Hemnet, we've obviously Not in that close to we're not on the board. We have friends who are on the board, but we're not on the board. But Bob Belong, we are and Bob Belong has obviously not gone public In the U. S, so whereas we typically want to be helpful in sort of getting you, our sort of investors, to sort of Get a feel for what where we think things are going and how it's developing, etcetera. Now in a listed U. S. Sort of world, we have To be very much more mindful, so I hope you'll appreciate us maybe not being as open with everything That's we think. But on the other hand, the companies, obviously, as they get listed, then they How much more transparent than there's regular results to sort of dig into, etcetera. Beyond Babylon, I guess, another thing during the quarter that's also been noticed, of course, is the Hemnett IPO just Just talked about and I think we covered also in the Q1 report, although it happened in the Q2 during the Q2. And that's now well Trading well. It's slightly off its high, but of course, a big step up still from the SEK115 per share where it IPOed In late April. We see here What do we have more? We've obviously done we've Sort of improves our liquidity by taking on some more debt, SEK 500,000,000 At a fixed rate of 5.5 percent that we announced we filed the prospectus This morning, so you may have seen some press releases around that during the course of the day. We as I think most of you sort of have heard us say before, And but worth reiterating that our financial strategy overall is not one where we see that this company should be debt funded. In fact, the kind of investment work we do in our younger companies rather than more mature companies, We feel should be equity funded. However, when we do have Parts of the portfolio that becomes more liquid through an IPO or where we have A clear path to some sort of exit. We will allow us to take on debt. And obviously, We have Hemet now being listed. We're under the sort of customer lockup. And Hemet's a great company, sort of no decision taken On whether that's an extra knot, I mean, in general, so we're very sort of happy holders. But the improved liquidity of it Going public, it allows for more debt to be allows us to have sort of part of It's funded by DASW and still the sort of the overall leverage is obviously very low at around 10%. And as Babylon is sort of well on a path to become obviously our largest investment And also on a very clear path to become listed that will further improve this. I'm not saying that we are going to do any more debt, But sort of as a background to the debt that we did during this quarter, And as has been sort of rumored and talked about in the press, etcetera, there's other parts of the portfolio that are looking at sort of Public Markets as well. I think maybe the other point, The only other sort of I thought I'd touch a little bit upon the portfolio in sort of very at a very high level and then go to Q and A. But Before that, we have also during the quarter had an exit. We sold our stake in Wallapop For about $12,000,000 Wallapop has been in the portfolio for some time. It's we've made money on it. It's not an IRR, which it's sort of a dilutive IRR to sort of the 30 ish percent That we have sort of produced over the years, it's not been a material position for us. And whereas that may have been the ambition Early on, that never was a for various reasons, it was not we weren't able to realize that. And Hence, it made more sense to sort of exit it as part of the funding round that they did earlier this year. I should also mention as a general sort of event or yes, during the quarter, We also well, or should I say, reinitiated Or I mean, our buyback program, I mean, we've been doing buybacks for the past 20 years, so it doesn't feel like something new. And I don't know if reinitiate sort of Re initiate is probably the right formal world description of its world. But it's something we constantly look at, Our stock trading at a discount is something which we always look at when we do new investments. And as you noticed, we have been trading at a discount, are trading at a discount and hence we felt it was the right time to sort of Do some buybacks and we bought back about 430,000 shares, which is about 2.4% of the company. And that's also worth mentioning. I thought maybe, George, if you could take us to the sort of Page 8 in the portfolio, So the overall sort of description of the portfolio, there's nothing sort of very new here. The larger parts of the portfolio are all none has sort of There's not much sort of difference here in terms of the overall structure is what I'm trying to say. Bauban is still the largest. Baubakar is still the 2nd largest. And but I think this is still a good starting point for Making a few notes, a few comments maybe about the portfolio overall. We've talked about the Babylon SPAC. We do also In the portfolio in the quarterly report, we also have some more details on the SPAC And also on how the company is going. And you will have seen, most of you, I'm sure, that Babylon, as part of this listing process, have also publicized their the presentation which they used to sort of raise the money Around the listing, the so called pipe deck. And that's also that's a public document now. We will be using some of that material in our material. And I think, George, if you could just flick To Page number 16. On Page 16, you'll see the revenue bridge, Which is of Babylon, which is comes from the its pipe presentation, The funding presentation. So from an $80,000,000 so 20.20 revenue, the PIPE presentation talks about Like a $320,000,000 revenue for the year 2021 and that increasing Again, a little bit more than double to $700 ish million in 2022. So this is more to highlight that this is how the company thinks about its future, thinks strongly enough about its future, So that it's sort of it's part of their funding presentation. And I'd sort of encourage you to look at that. But again, as to the point earlier where This is now becoming a public company, public company of NASDAQ. It's sort of we have to adhere To sort of the what can be said and not said during that Yes, I mean, on that company. I think if you go back at Page 15, I think this may be new for some of you as well, But it's also worth reiterating that the Babylov's management team is really sort of broadening out. And apart from Ollie and Charlie, which most of you have sort of come across before, there's now lots of capacity coming in From a very U. S.-centric sort of background with Steve Davis, who used to be the Senior Vice President of AI and Data at Expedia, now taking on the role of CTO, John Noota, who ran expert at Microsoft as the CPO And of course also Stacy Tsao, who is the Chief Operating Officer at the company now, who has done a lot of important work at Amazon, Especially in their products on Amazon Prime and Amazon Fresh. And not to forget also the PH, Paul Henry Ferrand, who came from BraxSuite Cloud and also been at Dell. He's now the Chief Business Officer. So really broadening out Very U. S.-centric management and which is very, very strong. I think if we go back to the overall portfolio slide on Page 8, as a sort of starting point, There is some comments in the press in the Q2 report that you've seen on Blavlicar, obviously, the 159% increase in the Q2 of their passengers Year on year is comparing it into a quarter where COVID was maybe the harshest, Right. So that's a very high percentage number, but it's one that sort of at least sort of Emphasizes that the BlaBla business model is working and working very well. And it's When countries shut down and keep on opening up and shutting down depending on sort of The virus, the business also goes up and down. But overall, we feel Still very, very keen on Blamacar and hence also the funding that we did and their ability to sort of make use of that Funding to be a little bit more aggressive versus competition and also in M and A. Just a few points on the new investments that we have made during the quarter. Best Doctor. Best doctor is like an Oscar Health or an Alain of Russia. And We have invested about $10,000,000 into that company and we have yet to sort of Disclosed the actual valuation, but this is obviously a market we know super well in terms of Russia. The clients of Our best doctor is, as you can imagine, the sort of most advanced sort of IT companies in Russia, which are large and which are very, very modern. We obviously know Avito very well and And are close to Zogendex and Mail and these others as well. So this is now A business model that's getting quite established in the rest of the world. Best Doctor is leading that in Russia. And we feel that this really has That's potential of a 10x upside, if you allow yourself 5 years or 5 years plus and are very excited To be part of that. The other one would be Collected Foods, which is like a curated marketplace for Food supply into restaurants, which that space has been sort of a very, very sort of antique sort of Process, but it's now digitalizing. And that brings a lot of opportunity in a very large market, GBP 145,000,000,000 Pounds for Europe alone. The and a lot of sort of Lot of middlemen to take out if you did utilize this, but also improvements in terms of sourcing of the foods, Ordering the right amount, etcetera, etcetera. And strong potential on network effects, A very, very strong team and a very large market is exactly what we want to do. And we're very Happy to be shareholders in this company now. And the third one that we can mention at this point is TICE, which is a social marketplace. So you can sort of think of it as the intersection of an Instagram and a classified And very, very, very strong network effects. Norwegian company, Norwegian management team, young, but very, very Aggressive and the benchmarks for this would be the Poshmark in the U. S, which is now listed at With market cap of about $3,000,000,000 I believe or vinted in Europe, which raised money last time around at 4,500,000,000 Yours, we've invested some $6,000,000 into this, but we're not in the position to sort of Talk about evaluation just yet, but as you can imagine, the upside here is very large And we are very excited about it. I think with that, we'll sort of open up the floor for questions. And if the operator could help us organize that. And if George, if you could take us back to Unless we're already there to the portfolio slide, that's the starting point. I think that's good. Thank Hello. I would like to ask for your for an update As much as you feel you can comment on the development of VOI in the quarter, you keep the valuation of VOI unchanged. We have seen bits and pieces that it seems like the momentum in the business is quite strong. If you could give us some reflection around VoIP would be greatly appreciated. Thank you. Yes. Thank you, Stefan. That's a good point. I sort of failed to mention that our Darling Voy is really sort of Steaming ahead. And I think the figures that we have been able to sort of share is that they did the 15,000,000 rides during the Q2, which is like 9x year on year. So that sort of speaks for itself in terms of sort of the growth it's seeing. It's with that become the largest European Pan European e scooter player, sort of leaving all the others behind And which is important because there are network effects here. There are benefits of being the largest, and They're clear and so that's important and sort of further augments the value of the company. It's also Won nearly half of all the licenses in Europe and which is far more than any competitor have. And furthermore, it's won about 80% of the tenders in the U. K, so really strong. Yes, no, it's Kept unchanged. The it's kept at the last transaction, Which is the way sort of our sort of NAV buildup works. So As I think all of you know, but so very briefly, the NAVs in rough terms basically, we use the last transaction for 12 months and that something sort of Very material happens and then we go to model. You can see from the report which holdings are the model and which are not. But boy is clearly at the last transaction, but the company is growing so strongly. So I think Yes, there will be good reason to revisit that, certainly, when we do the Q3, If not before. So company doing Very, very well, basically. I hope that Answers your question, Stefan, on VOY, a little bit at least. Apologies for being sort of not being sort of able to sort of Fill you in with more details. What I would like to mention now though is that and apologies for being a little bit coy about this, but We have there's just a lot of stuff going on at the same time, and we haven't we weren't able to include Anything in the report and neither in the presentation material that we've supplied for this Event, but for those of you who are in front of your screens, we've just now announced that our portfolio company, Swivel, It's also to list through a SPAC. And this is fantastic news For us, and obviously, nothing to do with this quarter, but important note now that We're happy we're speaking. So They are the company has been valued at $1,000,000,000 and it's raising nearly $450,000,000 in gross proceeds. We participated with a more nominal, but still $2,700,000 in the pipe transaction, which is totals about $100,000,000 It's expected to close in the Q4, and it's a significant revaluation, as you'll note from where we have it in the accounts on the Q2. It's about another $100,000,000 for us coming up to about $140,000,000 which adds About SEK 8 per share to our NAV. So obviously nothing as per this quarter, but happy to have it out there. And we were waiting the conference is waiting for the last signatures to announce and then hence, we announced on the back of that. And this is also obviously Explains a little bit more about the unfortunate sort of resignation Of unfortunate but fortunate. So Victoria Grace, our Board member, announced yesterday Or we signed from the Board yesterday. That was announced before opening this morning or late last night, I think. And the statement as per her resignation was that it was she resigning And she was citing a looming conflict of interest. And obviously, the SPAC that Swivel is merging with It's a SPAC called the Queen's Gambit and Victoria is the sponsor of that SPAC. So as you can imagine, a difficult position to be in and hence are stepping off Our Board, so that we can act sort of freely as shareholders in Swivel and With no sort of with everything being very sort of with any potential conflict of interest sort of being Removed in this way. So sorry, that was not part of Stefan's question, but I just got a text that we That has been publicized, so I thought I'd mention that too. Now we can go back to whatever other questions there may be, if the operator could help us. Thank you. Okay. There seems to be no further questions from the phones at this time. All right. Well, thanks everyone for joining in, and I'll speak to you all in 3 months. Thanks.