VNV Global AB (publ) (VNV) Earnings Call Transcript & Summary

Welcome to the VNV Global Q2 '21 meeting. Today, I am pleased to present Per Brilioth, Chief Executive Officer. [Operator Instructions] I'll now hand the floor to Per. Please begin.

Hi, everyone, and thanks for joining in Q2 results, it's that time of the year. And, yes, we'll dig right into it. I got my colleague, George, who's 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 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. 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 million into the portfolio. Where, obviously, BlaBlaCar, which we've spoken about before, I believe, is -- at the Q1 results what well 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're 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 on that we'll be able to do something. But one that sort of does stand out that we did do during the quarter was a BestDoctor. 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 two, we described in this report, which is Collectiv Food and Tise. 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 in the press release, but worth mentioning would be Babylon, obviously, announcing that they are going public through a merger with Alkuri Global Acquisition Corp and that's now in motion -- going through the process that these packs go through with their -- with regulatory approvals and shareholder meetings, et cetera, but that's all. We're very excited about that and expect that to soon be concluded. On a sort of general note, as things go public in our portfolio, Hemnet, we've obviously not been that close to, we're not on the Board. We have friends who are in the Board, but we're not on the Board. But Babylon, we are, and Babylon's obviously now going 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, et cetera. Now in the listed U.S. sort of world, we have to be very much more mindful. So I hope you appreciate us maybe not being as open with everything that we think. But on the other hand, the company is, obviously, as they get listed, then they become much more transparent than there's regular results to sort of dig into, et cetera. Beyond Babylon, I guess, another thing during the quarter that's also been noticed, of course, it's the Hemnet IPO. And I just talked about, and I think we covered also in the Q1 report, although it happened in Q2 during the second quarter and that's now well -- trading well. It's slightly off its high, but of course, a big step-up still from the SEK 115 per share where it IPO-ed in late April. We see here -- what do we have more? We've, obviously, done -- we've sort of improved our liquidity by taking on some more debt -- SEK 500 million at a fixed rate of 5.5% 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 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 Hemnet now being listed. We're under the sort of customary lock up. And Hemnet is a great company, sort of, though decision taken on whether that's [indiscernible]. I mean, in general, so we're very sort of happy holders. But the improved liquidity of it going public is -- allows for more debt to be -- allows us to have sort of part of it funded by debt. And still -- the sort of the overall leverage is obviously very, 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, et cetera, 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 little bit on the portfolio in sort of very, very -- at a very high level and then go to Q&A. But before that, we have also, during the quarter, had an exit. We sold our stake in Wallapop for about $12 million. 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 -- for various reason 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 -- we've also -- well, what 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 -- reinitiate is probably the right formal word -- description of its work. But it's something we constantly look at in our stock trading at a discount. It's 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, the overall sort of description of the portfolio. There is 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. Babylon is still the largest. BlaBlaCar is still the second largest. But I think it's still a good starting point for making a few notes -- a few comments maybe about the portfolio, overall. And we've talked about the Babylon SPAC. We do also in the -- in the portfolio -- in the quarterly report, we also have -- we 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 flip to Page #16. On Page 16, you'll see the revenue bridge, which is -- of Babylon, which is -- comes from the -- its PIPE presentation, i.e. the funding presentation. And so from an $80 million, so 2020 revenue, the PIPE presentation talks about like a $320 million 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. And -- but, again, as to the point earlier, where this is now becoming a public company -- a public company on NASDAQ. It's sort of -- it's -- we have to adhere to sort of be what can be said and not said during that -- I mean, obviously, on that company. I think if you go back to Page 15, I think this maybe new for some of you as well, but it's also worth reiterating that the Babylon management team is really sort of broadening out. And apart from Ali 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 Davies, who used to be the Senior Vice President of AI and Data at Expedia, now taking on the role as CTO. Yon Nuta, who ran Xbox at Microsoft, as a CPO. And of course, also Stacey Saal, who's the Chief Operating Officer at the company now, who has done a lot of important work at Amazon, especially in the products on Amazon Prime and Amazon Fresh. And not to forget also the PH, Paul-Henri Ferrand, who came from Brex, Google 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 Q2 report that you've seen on BlaBlaCar. Obviously, the 159% increase in the second quarter of their passengers year-on-year is comparing it to a quarter where COVID was maybe the harshest, right? So that's a very high percentage number, but it's one that's 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 BlaBlaCar 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&A. Just a few points on the new investments that we have made during the quarter, BestDoctor is like in Oscar Health or Allianz of Russia. And we have invested about $10 million into that company. And we are yet to sort of disclose the actual valuation, but this is, obviously, a market we know super well. In terms of Russia, the clients of BestDoctor 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 are close to sort of Yandex, Mail, and these others as well. So this is now a business model that's getting quite established in the rest of the world. BestDoctor is leading that in Russia. And we feel that this really has a potential of a 10x upside if you allow yourself 5 years or 5 to 10 years or 5 years plus and are very excited to be part of that. The other one would be Collectiv Foods (sic) [ Food ] , 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 billion for Europe alone. And then lot of sort of -- lot of middlemen to take out if you digitalize this, but also improvements in terms of sourcing of the foods, ordering the right amount, et cetera, et cetera. And strong potential network effects, a very, very strong team and a very large market. It's 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 Tise, which is 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 posh mark in the U.S., which is now listed with a market capital of about $3 billion, I believe, or Vinted in Europe, which raised money last time around at EUR 4.5 billion. And we're not -- we've invested some $6 million into this, but we're not in a position to sort of talk about the valuation 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.

[Operator Instructions] We currently have one question in the queue so far. That's from the line of Stefan Ward of Pareto Securities.

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 Voi would be greatly appreciated.

Yes. Thank you, Stefan. That's a good point. I sort of failed to mention that. Our darling Voi 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 18 million rise during the second quarter, which is like 9x year-on-year. So that sort of speaks for itself in terms of sort of the growth it's seen. 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 -- 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's something sort of very material happens, and then we go to model. You can see from the report, which holdings are to model, which are not. But Voi is clearly at the last transaction. But the company is growing so strongly, so I think for -- yes, there will be a good reason to revisit that, certainly, when we do the Q3, if not before. So company is doing very, very well, basically. I hope that answers your question, Stefan, on Voi, a little bit at least. Apologies for being -- not being sort of able to sort of fill you in with more details. What I would like to mention now, though, is -- 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 have 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, SWVL, is 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 is been valued around $1 billion, and it's raising nearly $450 million in gross proceeds. We participated with a more nominal, but still $2.7 million in a PIPE transaction, which is -- it totals about $100 million. It's expected to close in the fourth quarter. And it's a significant revaluation, as you'll note from where we have it in the accounts on the second quarter. It's about another $100 million for us coming up to about $140 million, which adds about SEK 108 per share to our NAV. So obviously, nothing as per this quarter, but happy to have it out there. And we were waiting -- the company 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 resigned from the Board yesterday. That was announced before opening this morning or last night -- late last night, I think. And the statement as per resignation was that it was -- she is resigning and she was citing a looming conflict of interest. And obviously, the SPAC that that SWVL is merging with is a SPAC called Queen's Gambit, and Victoria is a sponsor of that SPAC. So as you can imagine, a difficult position to be and hence her stepping off our Board. So that's -- so that we can act sort of freely as shareholders in SWVL 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 to text that we -- that it 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.

[Operator Instructions] There seem 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.