Kinnevik AB

Good morning and welcome to the presentation of Kinevix results for the third quarter 2023. I'm Jorg Eganov, Kinevix CEO, and with me today is our CFO, Samuel Sjöström, and our Director of Corporate Communications, Torun Litzen. On today's call, we will walk you through the key events during the quarter, including our most recent investment activity. We will lay out the key valuation changes, and finally, we will track our progress against the priorities and expectations we set at the beginning of the year. But first, as you all know, the market environment in which we operate continues to be very challenging. This, in turn, has affected the market sentiment towards high growth businesses like ours and thereby towards Kinevik. It should escape no one that I am not satisfied with the development of our net asset value and of our share price. But what matters most in times like these is how we act in the face of these headwinds. As an active owner, we're working closely with our founders and other co-investors to support our companies in navigating these volatile and uncertain times. It's more important than ever to strike the right balance between growth and profitability. It's also important for us and our companies to be able to make difficult decisions in the short term to create a more resilient portfolio and lay the foundation for strong value creation in the long term. In addition, we're also focused on creating ownership and deploying more capital in our high conviction businesses at more balanced valuation and making use of the opportunities that arise in more risk avert markets. And we are well positioned to do this due to our permanent capital structure, our strong financial position and the full flexibility to determine the pace and magnitude of our deployments. Let's now move to page four and have a look at the key highlights during the quarter. Our net asset value amounted to 50.8 billion SEK. That's down 6% in the third quarter. And Samuel will guide you through the development of the valuations of our private companies in just a few minutes. One of our key priorities this year is to invest more into our high conviction businesses and maximize the impact and concentration of those businesses in our portfolio. And by doubling down in companies like Spring Health, Agreena and Travel Perk earlier this year were doing just that. This quarter, we have deployed more capital into H2 Green Steel and Enveda. We also have a new addition to the portfolio, a 31 million euro investment in the clean energy tech business ERA. And I will give you some more color and expand on the reasons behind our conviction in H2 Green Steel and ERA in just a minute. During the quarter, we also released 275 million SEC from our growth portfolio through the sale of our investment in Grayson, the German fintech company we first invested in back in 2018. One part of the portfolio which is seeing particularly strong headwinds is consumer-facing e-commerce. We've seen falling order volumes and a more price-sensitive consumer for some time now. And this quarter, we're writing down our investment in InstaBee by underlying 48%. Samuel will talk more about the challenges in our consumer businesses and what they have faced later on. Moving on to page five to give you some more details on our follow on investments of 75 million euro in H2 Green Steel. We first invested in H2 Green Steel last year, and they have delivered on several key milestones that were crucial for the validity of the project. They have secured relevant regulatory approvals, and they have signed considerable volumes in offtake agreements with over half of the annual production volume already pre-sold. With this funding round, they have now funded a business plan for the completion of the Boden plans. And thereby risk comes down significantly. But the ambition level remains high. Operations are expected to start in 2025, and the Boone facility is expected to initially in phase one produce two and a half million tons of green steel annually with the capacity to double those volumes over time. A key differentiator for H2 Green Steel is that they will operate with significantly higher efficiency and lower costs compared to the incumbents in the steel industry, not to mention reducing carbon emissions by 95%. Decarbonization and the transition towards net zero is one of the most pressing challenges of our time. as it represents 7% of emissions globally. And in Sweden, it represents almost twice that. With an ever-evolving regulatory landscape and an increasing number of companies setting science-based targets, the demand for green steel is expected to far outpace supply for the foreseeable future. Taking a step back, we started looking into the climate tech sector in 2021. and H2 Green Steel is the largest of the six companies we have chosen to back. And this creates a good bridge to talk about the sixth and the newest addition to our climate tech portfolio, ERA, on page six. Residential heating is responsible for 10% of all Europe's carbon emissions, and we believe it's on the verge of a major transformation. Over the last 18 months, We have assessed several opportunities within the residential energy and heating area at depth. And before ERA, five of them reached the end of our funnel, but ultimately we elected to pass on each of them. What sets ERA apart is their fully vertically integrated model, which we believe is the key to capture the opportunity of electrification in an attractive way. Aera operates in a market which is characterized by high fragmentation, low installation efficiency, and poor customer experience. And by connecting the full value chain, they can offer competitive pricing and higher sales conversion rates, and they have a stronger margin potential, and they can control the customer experience from start to finish. And importantly, with Aera's innovative and accessible solutions, Households can save up to 40% on their heating costs while simultaneously reducing CO2 emissions by more than 75%. And as always, in early stage investing, the team is crucially important. And in the case of ERA, we believe they have an exceptionally strong setup. The management team possesses an expertise and experience typically found in later stage growth businesses. very well placed to execute on ERA's bold vision. We also know the CEO, Martin, well from our previous portfolio companies, MTG and Millicom. And in addition, we believe that Kinevic, with our experience in scaling global consumer businesses, can be a strong strategic partner to ERA and add considerable value as an early stage investor. Just like H2 Green Steel, AERA is founded by Vargas, a climate tech investor co-founded by Harald Mix, a member of our board of directors. And for the avoidance of any doubt, and as per standard Swedish corporate governance processes, conflicted board members are not part of the discussion nor the decision-making process for such investments. Let's now take a look at what our recent investment activity means for the assessment of our company's runway on page seven. With our investments in Spring, H2 Green Steel and Invera, we have made significant strides during the first nine months of the year to seize opportunities in our existing portfolio. Out of the four and a half billion SEC deployed so far this year, 3.8 billion has been directed to the existing portfolio. And last quarter, we said we expect to follow one investment to make two thirds of the total investment in 2023. We are currently working on additional preemptive and secondary opportunities that may push this percentage share even higher. This draws on our priority to make use of the market environment and to increase our exposure to the high conviction businesses and improve our portfolio's concentration. We are on the track to allocate more than 80% of our follow-on capital in companies where we have the strongest convictions and where we are creating in ownership. Even excluding VillageMD, around 60% of our private portfolio is invested in companies that are profitable or have fully funded business plans. Only around 10% of the value of our private portfolio sits in investees whose runways ends within the next 12 months. And all this aside, we're seeing more and more interesting opportunities in this market when it comes to new investments. It's an investor's market out there, meaning we have more time to evaluate new opportunities and we have strong cash position, which we are willing and ready to deploy. And with that, I would like to hand over to our CFO, Samuel, to provide you some more detail on our private valuations and the development of our net asset value, starting at page eight.

Thank you, Jorgi, and good morning, everyone. So from a quarter-on-quarter valuation standpoint, Q3 was relatively straightforward. Another turn of significant multiple contraction and continued challenges in consumer-facing e-commerce. So in this quarter, I'd like to take the time to also cover our valuations from a slightly longer-term perspective and touch on the different dynamics we're seeing as our companies and their valuations develop coming out of the pandemic. Let's start with the quarter-on-quarter movements on page nine. We are taking down the fair value of our private portfolio by 7% this quarter, a magnitude in line with the development in its public peers. In SEC, that corresponds to a write down of 2.3 billion. Adding the 1.5 billion SEC invested in the quarter, less than 300 million SEC worth of exits, primarily from Raisin, the carrying value of the private portfolio comes down by 1.1 billion to 31.4 billion. This write down is, again, originating primarily from multiple contraction in double-digit percentages spread across all sectors and categories. But there are also company-specific developments that bear a meaningful impact on our valuations relative to the public comparable universe. The quarter's most notable valuation revision is that we're taking a substantial write-down over InstaBee investment, catalyzed by a weakened Swedish e-commerce outlook. A notable stability, on the other hand, is that our core software and virtual care investments are flat on average. while enduring multiple compression of around 15% in a single quarter. And I'll be getting back to the parts of the spectrum of our portfolio that these differences reflect later. Looking at the more technical factors, similar to the most recent quarters, the effect of liquidation preferences is coming down this quarter by some 200 million SEC. Why is that? Well, it's because in a handful of businesses, underlying positive valuation changes do not have an as positive impact on NAV until we've caught up to higher valuation levels than where we're marking these companies currently. As we eat into this gap, the effect declines. The flip side of this is, as you will recall, that our valuations did not fall as dramatically during 2022 when we accrued this effect, which peaked at 3.2 billion SEC in Q4 2022. At quarter end, this effect amounted to 2.6 billion SEC, and it remained centered in a handful of assets representing around 4 billion SEC of NAV, such as betterment and job and talent. The effect from currencies, on the other hand, was fairly small this quarter relative to what we've gotten used to, bearing 130 million SEC negative impact due primarily to a depreciating euro. So all in all, and in short, Q3 was a quarter during which our unlisted portfolio developed in line with its public peers, even when absorbing the significant write-down at InstaD. On the next few pages, I will go through three groups of businesses of our private portfolio that share different sets of characteristics. But before that, one of our smaller, more emerging clusters that captivates many is the investment in climate tech that we've built up over the last two, two and a half years. By end of Q3, these handful of businesses represented around 9% of the private portfolio by value, or 2.8 billion SEC, clearly boosted by this quarter's investments into HD Green Steel and Aero. This group of businesses is beginning to reach a level of critical mass. And we will therefore be breaking out climate tech as its own NAV category, starting in fiscal 2024, along with valuation commentary on the categories more impactful investments like H2 Green Steel and Sologen. But for now, onto the historically larger categories of businesses that I'd like to give some color on, spanning our fast-growing core in software and virtual care, through our maturing value-based care companies to our more challenged consumer e-commerce businesses, whose share of our portfolio has dwindled after the pandemic. And with that, we're on page 10. So these are our five largest virtual care and software businesses. Clio, Cedar, Spring, Travelperk, and the more recent addition, Muse. This pillar of ours represents 35% of our total private portfolio and 90% of our investments in these two sectors. In Q3, these businesses faced 15% multiple contraction on evaluated average basis, with aggregate fair values for the group still remaining flat quarter on quarter, thanks to continued growth and controlled burn as they progress towards profitability. From the much more interesting longer-term perspective, these companies have faced around 70% forward multiple contractions since end of 2021. But by growing top line by around 3x between 2022 and 24, depending on how you weigh them, and by meaningful profitability improvements, as well as some FX tailwinds, the effect on our fair values has been less violent on average. In 2023, again on a value-weighted average basis, These companies are doubling revenues and they are more than doubling gross profit. In 2024, we expect them to grow by close to 65%. And their 2024 EBITDA loss margin is expected to come in at 15 to 20% on average, spanning breakeven to negative 30%. In this quarter, we're valuing these businesses at 10 times revenues or 15 times gross profit on average. That is a valuation level coming in line with public high growth software companies in 2024, with our companies showing as strong or stronger capital efficiency or rule of 40 metrics, as it's often referred to. Naturally, these are companies where we're supportive of them working to improve profitability in a substantial way, but more importantly, we're mindful of them not overcompensating and unnecessarily compromising on the longer-term growth opportunity that their respective potential and their respective markets provide. We have deployed 1.8 billion SEC into these businesses during 2023 to date, primarily through our investments in spring, but also travel perk. And we are working hard to unlock opportunities to invest even more capital into these five. Those investments may come in the form of primary equity to fuel higher or longer term growth than what we're expecting from them now, or in secondary equity to grow our influence in these companies, as the case was with Spring in the previous quarter. And as importantly, managing to convert these opportunities will help accelerate our portfolio's exposure to this group of companies, which is, as you know, a top priority of ours. Looking then at another category, one which has come further in shifting from high growth to near-term profitability during the last two years, while also working against significant multiple compression. And that's our two large value-based care companies. And that means we're on page 11. In Q3, we're taking down our fair values by 11% for VillageMD and 5% for Citiblock. Levels which are within the range we're seeing in public, more traditional healthcare providers. Looking back, since end of 2021, Village and Citiblock have faced 50% multiple contraction, but they have grown at a respectable rate and are almost doubling in size over 2023 and 2024 combined. while making progress on their respective paths to profitability. And to be clear, that growth pace is on a pro forma basis for Villages' acquisition of Summit CityMD. Now, you will have noted Walgreens' report last week, where it guided towards 10% to 17% growth in its healthcare segment, with a midpoint EBITDA guidance of break-even in their fiscal 24, ending in September next year. Now, that's not quite what we envisaged when the merger of VillageMD and Summit was announced late last year, but it is in line with expectations we reset last quarter. So, yes, Village has faced its share of challenges, but we have trust in Walgreen's plan and the ability to execute on it. Citiblock, on the other hand, has performed above expectations in 2023 on top line, on gross profit and on cash flow. Year to date, they have taken large steps towards profitability and we expect them to break even on an EBITDA basis in late 2024. All the while, we see them outgrowing the more mature peer universe by 5x on top line in 2024 and by upwards of 10x on contribution profit. They also enjoy having a significant net cash position, multiples more than their expected burn until reaching cash flow profitability, which clearly de-risks this path. VillageMD has arguably reached the far right end of the S-curve distribution of our portfolio, while Citiblock is a few steps behind and still growing at a high pace, but not with quite the pace that we saw in 2020 and 2021. And that's all very intentional. And I think intention is what brings us to the last category I wanted to touch on in showing the different types of businesses that form our portfolio. And that is a category where growth has slowed after the pandemic for other than intentional reasons. And I'm talking about our consumer-facing e-commerce businesses, and we're on page 12. These businesses have probably had the toughest time of all our portfolio companies over the last two years, facing powerful multiple contraction while their markets have been and are still swinging back after pandemic-fueled consumer behavior and a topic consumption market. You all know online grocers face the reversal of pandemic trends first, and most forcefully, But their outlook is now stabilized somewhat, and our companies will face easier comparables growing into 2024. Omeo, our consumer-facing travel booking platform company not included on this page, naturally saw the opposite pattern. The effect on other e-commerce categories has been slightly less drastic than the case has been in groceries, but it has crept up over the last few quarters. In Sweden, e-commerce is down in single-digit percentages in terms of Swedish crowns, boosted by inflation. In terms of parcel and delivery volumes, it's down by more than that, in particular in certain subcategories. The consequences of this have escalated recently, and the outlook for retail's always important Q4 is uncertain. This has impacted our near-term outlook for InstaB materially, and it's why we in this quarter are taking down our underlying valuation of the company by 48%. That this is the category of companies in our portfolio that has had the toughest time shows also in the longer-term numbers. Forward multiples have come down by 50% since end of 2021, and by more so at our grocers. But at the same time, their respective markets have contracted materially, causing these four consumer-facing e-commerce businesses to be expected to grow top line by a meager 10% over 2023 and 2024 combined. With very limited growth to offset multiple contraction, and with a loss of scale hurting profitability, This has been the main driver of the significant, almost 70% cut in fair values during 2022 and 23 to date. And this in turn is what has caused our private portfolio's exposure to these companies to be cut in half during the same period, from 14% in end of 21 to 7% of the carrying value of our private portfolio in the NAV we're posting today. Now, this organic change in portfolio balance coming out of the pandemic, together with our more forceful capital reallocation within the portfolio, is what combines to shape a more resilient and attractive portfolio looking ahead. With that, I'd like to end with the full NAVs development in the quarter, also considering our public investments and net cash position on page 13. So again, We're taking down the fair value of our private portfolio by 2.3 billion SEC. And adding the 1.5 billion SEC invested in the quarter, less than 300 million SEC worth of exits, primarily from Raisin, the private portfolio comes down by 1.1 billion to 31.4 billion at the end of Q3. Recursions share price continued to swing up and down, ending the quarter largely where it started it. And GFG had another soft quarter. Tele2 was down 0.8 billion SEK with a tough start to the quarter with concerns around capex and cash flow growth, which were somewhat debated after the results of the recent Spectrum auctions. And this morning, they reiterated their guidance for 2023 and the medium term. All in all, NAV was down 6% in the quarter to 51 billion SEK, of which 7.6 billion being our net cash position. Proforma Tele2 dividends we received last week, our net cash position amounts to 8.1 billion SEK. So to sum up, a weak quarter characterized by multiple compression, but with further steps taken to concentrate the portfolio into a smaller number of high conviction, high performing businesses, and to end the year with a more promising and rewarding portfolio balance than we started. And with that, I'd like to hand it back over to Jorgi for his concluding remarks.

Thank you, Samuel. Let's now go to page 15 to take stock of our priorities and expectations for 2023. As we have said a few times by now, the environment in which we operate is highly challenging. And I'm not satisfied or proud with how these challenges have impacted development of our net asset value and of course our share price. But against that backdrop, we must differentiate between what we can control and what we cannot. We cannot control the market, but we can control how we work with our portfolio companies to make them more resilient. We cannot always control which companies ask for capital, but we can control who we allocate it to. And our main priority remains to increase our portfolio concentration, making sure we increase exposure to the high conviction businesses and decrease exposure to the poor performers. This happens organically as the poor performers are struggling in this environment and their value decreases in relation to the rest of the portfolio. But it's also done by disciplined and forward-leaning capital allocation. In our high conviction businesses, we're instigating transactions and actively working to accrete ownership either through primary equity that allows our performing companies to accelerate and maintain growth, as you just heard Samuel explaining, or in secondary equity to increase our influence. All the while, we are unsentimental around our poor performing businesses and require significant measures to change their trajectory for them to be investable. Valuations don't always reflect the underlying performance of companies. And in the face of significantly contracting multiples and a slowdown in growth, we have written down our private assets significantly since the peak in late 2021. But even so, with today's reported valuations, we post an IRR of 22% in the group of companies which we have invested in since 2018 and onwards. We believe in our strategy, and we continue to execute on it with determination and grit. With our strong financial position, our active ownership model, and strictly disciplined capital allocation, we're making sure we're laying the foundation for long-term value creation. We're as ever grateful to the shareholders that support our continued rebalance of our trajectory for the coming years. And with that said, we're now ready to answer your questions. So, operator, please open up for Q&A.

Thank you. Dear participants, as a reminder, if you wish to ask a question, please press star 1-1 on your telephone keypad and wait for a name to be announced. To withdraw your question, please press star 1-1 again. Please stand by while we'll compile the Q&A roster. This will take a few moments. And now we're going to take our first question from the line of David Johansson from Nordea. Your line is open. Please ask your question.

Hi, good morning. I have three questions. First, on your new company, Aira, could you talk about this investment from a governance perspective, given the role of one of your board members? Couldn't there be a risk here? And second, what do you think the roadmap for this company is ahead? That would be the first one.

Okay, hi David. So firstly on the governance piece, as I said during the presentation, any conflicted board members, in this case it's both Harald and Sanna, they have not been able to read any documentations around our investment thesis. They're not being part of the decision-making process. Any follow-on investments in the future, potential ones, I should say, they will not be included in that discussion either. So I am 100% confident that we have no risk on the governance side. On the contrary, our close partnership with the Swedish kind of venture arm as such, but also Vargas as a climate tech investor and how we can leverage that network internationally is extremely powerful for Kinevik. There are a bunch of international investors coming in now in an era, and I'm sure that that company will also be able to attract more capital over time internationally, also based on our close relationship with them since before. So I have no kind of issues with the governance piece. Talking about their roadmap, they have communicated today that they have secured almost a billion SEK in this funding round in a quite difficult climate. That in itself, I think, is an important milestone. They have acquired a factory that are able to produce heat pumps according to kind of a new way of working. So there will be fewer models, if you will, very different from the market today that will be able to streamline everything from production to installation and sales. So consumers will have a kind of simple, easy to understand value proposition financed, which means that there is no kind of upfront cost. and you're able to reduce your heating cost and massively decrease your CO2 footprint. And we think that the vertical integration of ERA and their way to produce the heat pumps, sell the heat pumps, support the heat pumps, is actually what is needed to push this transformation.

Understood. And on VillageMD, you have talked about your potential exit plans for this company. Do you see the risk of that plan being delayed now with the weaker commentary from Walgreens and maybe also who you think the potential buyers could be of your 2% stake here? Thank you.

I think the main delay, if you will, according to our earlier expectations, is probably the weak market overall. I mean, it's no secret that Village had ideas to go public, but in a market like this, it's quite difficult, right? And of course, a major acquisition or merger like the one with Summit also takes some time before the company gets control and everything and can produce kind of a joint new business plan that the market will appreciate. So I think from that perspective as well, there's a delay. We think a public IPO is kind of the main default exit path, if you will. But they could also be, you know, any type of seller that would like to have this exposure or even Walgreens. We would discuss with with potential buyers, obviously. But given our strong financial position, there is no rush.

OK, thank you. And just lastly, on InstaBee, one of your co-investors appear to make a different judgment when valuing this company. It would be interesting to hear your view on the valuation difference currently and also a bit on the runway situation. I believe you have said previously that InstaBee has run way through profitability in 2024. Is still this your view? Thank you.

Hey, David. It's Samuel. So with regards to our public co-investor, Creadus, and where they end up in their valuation process, I mean, all I can say is we have our process. We don't make compromises on it. Clearly, we discuss developments in our investees with our co-investors and how these developments might affect how much a business is worth. But we don't set each other's valuations, nor do we align with them clearly before quarterly reports. So I just summarized it as we have a slightly different view on valuation in this specific quarter. It's probably within some form of margin of error. What I would say that we share is a long-term enthusiasm about the company, and we're excited, even though e-commerce is going through a rough patch. With regards to the runway, I think we're going to have to get back to you. Clearly, Q4, as I mentioned, is a massively important quarter, and we'll see how that pans out, and we'll take it from there.

Okay, thank you. That was all from me.

Thank you. And now I'm going to take our next question.

And the question comes from the line of Derek Laliberte from ABG Sundal Collier. Your line is open, please ask your question.

All right, good morning and thank you. So I'd like to follow up on VillageMD. We've seen a couple of larger downgrades from you of late there. What would you say from this point are the main risks to your valuation? Is it operational performance or is there perhaps that Walgreens decides to do another sort of shift in operational shift or could there potentially be a risk that you could be substantially diluted if the company needs to raise more funds at some point in the lower future at lower valuation levels? Thank you.

Hey there, it's Samuel. I think what's driving the valuation this quarter really is peer multiples and not much else. The company is to date performing in line with the expectations we reset in Q2 and you saw Walgreens guiding for the same expectations a week ago or two. I think what's going to drive valuation from here on out is profitability. And we understand Walgreens and Village are very focused on that. How they reach that, it seems like we're looking at options to streamline the footprint. They're shutting down unprofitable markets and unprofitable regions. So, I mean, we're not too worried here because You should also recognize that the village and the healthcare segment is a very large part of Walgreens equity story now. It's really their growth engine considering where their retail business is at. So it's about executing on the plan. We think risk is arguably lower in this sort of maturity level of a company. And it's just about the execution really from here on out on the EBITDA.

Great, I understand. Okay, and then on village also, then on profitability, do you see a path forward for the company to strengthen the gross margin meaningfully in any way? And how would that go about?

I think the gross margin and the contribution margin are sort of the key determinants for which markets are the most attractive. And those markets with the lowest gross margins and contribution margins, we would expect are sort of at the top of the cutting block, if you may. So we see very strong proof points in the stronger markets that this business is able to get to EBITDA profitability within a year, for sure.

Okay, great. I was wondering if you broadly could speak on H2 Green Steel here, what your thoughts are on the... There's been some, like I say, heavy criticism surrounding the timeline of the project being way too optimistic. And if delayed by a couple of years, how would that impact financing and valuation from your perspective, broadly speaking?

Yes. Hi, Derek. So, I mean, start by saying, yes, it's a very ambitious plan for sure. We know that being up and producing kind of green steel in 2025 and scale up over the next coming years will mean that they are first in the world to be able to produce green steel with these volumes. As far as we look at this now, the business plan for Boden is fully funded. And that's what's most important. And in this phase one, as I said, they will be able to produce two and a half million tons of green steel with the potential to double that capacity over time. That's the plan we are following. I mean, these are important milestones, obviously, along the way. So we will be able to track it quarter by quarter now to see how they are progressing. But many of the binary risks that we saw when we did our initial ticket are now resolved. And so there's less about those kind of binary risks and more about the execution risk in building this plant.

Okay, cool. And finally, regarding your latest investment in In AIRA, I understand your optimism, obviously, around this. But, I mean, given the sort of more nearby, so to speak, investments in AIRA and H2G as a follower, should we read this as you're sort of struggling a bit to find attractive opportunities on the global market here, despite valuations having come down meaningfully, which should create opportunities just simply, so to speak?

Not at all, Derek. I mean, again, going back to ERA, first of all, these two investments are very, very different. They happen to be founded by the same people originally, which I think says something about the innovation we see right now in Sweden. And going outside our border, investors and climate tech companies in general, I think they're super impressed what's happening here. I think it's a bit a shame that we don't share that appreciation in Sweden, actually. But that's just a side note. When it comes to other opportunities, we looked at a number of businesses that are in the same space or sector.

So basically. The risks. residential heating or electrification. So we'll look at the M-PAL in German. ... ... ... ... ... And we decided not to proceed with those investments because of the various reasons. And we believe that AIR-RISE is the one having the most ambitious plans to actually do this. which we think I think it's a prerequisite in order to lead to disrupt this market. So you can have a product that is streamlined not only to produce, but to sell and to maintain. And that's why we took the decision to invest in Aira. And Lastly, we are also coming

in early on in this business which means we're backing the business from the start and we can therefore build a different type of position when it comes to ownership and influence compared to some of the other electrification companies we've looked at.

All right I appreciate the clarity those are all my questions thanks.

Thank you. And now we're going to take our next question just give us a moment. And the next question comes from the line of Joachim Gunnell from D&B Markets. Your line is open. Please ask your question.

Thank you and good day.

So two questions from me. As you can see, to have a higher investment in the next 5 billion seconds targets earlier this year. Can you just comment? if Ron Redd was so representative what you will have to see ... ... ... ... ... ... ... ... ... ... It's a relevant question, but again, we are also not yet you know, we don't have a budget that we strictly have to follow. calendar years is just

We always assess what we have in our funnel. We look at those opportunities we mentioned, secondary opportunities in companies like Spring, all the time. And this year, I think in particularly, what comes really on top of the plan we have is really the Spring transaction in Q2. So that is what comes on top. And we did not see that we had to decrease our ambition and the other areas because of spring. If this will have an impact of 2024, we'll see. But right now, we are continuing seeing that we will invest around 5 billion per second a year.