VEF AB (Publ)

and thank you for standing by. Welcome to the VEF fourth quarter 2025 earnings call and webcast. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, please press star 1 1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1 1 again. Please note that today's conference is being recorded. I would now like to hand the conference over to your first speaker, David Nangle, CEO. Please go ahead.

Super. Thank you very much. Good morning, good afternoon all. I welcome you today from Manila in the Philippines where I'm on the road seeing companies and looking at some of our investment companies in Dubai for the last couple of days. This is a welcome to our Q4 25 results presentation. I do have Alexis Kumudos, our CIO, with me on this call as per usual and up in the next We'll spend the next 15, 20 minutes just running through key highlights of the quarter and the year, given that it is the end of year quarter, and outlook for everything that we see at best, and then happy to answer any questions that you have. Moving on to slide two in the presentation, it's an evolution of what we've been saying for most of the year. Like the NAV still contains a trend higher. We're very happy. It's a reflection, obviously, of everything in our NAV with our portfolio companies and their performance. Q4 in itself was up a healthy 6.9% in dollar terms and over 22% for the full year, obviously less in SEC, given the SEC strength versus the dollar. But a big driver in Q4 was Creditas, which we'll speak about, and its latest fundraise, which came through quite nicely in Q4. But generally speaking, the NAV this year was a reflection of our portfolio, and it's really about a portfolio that the risk-reward is much better than it was in the past. We're majority at, give or take, break even, and growth is very much back in focus. That's been reflected in our top names like Creditas, Compio, and JustPay, which is humming along quite nicely at a very healthy clip. The focus in the quarter, and obviously it's a big part of our story, is Creditas, had a very big quarter in terms of, one, results, and it's been coming. We talked about the transitionary period from hyper growth and burn to no growth and break even. And now they're starting to put their foot back down in growth again, but more sustainable growth at this point in the cycle. So through the quarters this year, we've seen them get towards 20% year-on-year credit growth, which is driving the income statements. We'll talk about that. And that was key to see those results coming through quarter on quarter on quarter as we went through the year. And that's key for our value and our future. Also from the credit card side, they had a number of standout events in the quarter. We already mentioned or touched on the the latest funding round, but also they closed the and bank, they got a bank license in Brazil, which is key for their franchise value and their funding, and also made a substantial hire at top level. And then last point, the whole area of capital, capital management, capital allocation, FF. We've, in 2025, very focused on strengthening the balance sheet, exits, we'll talk about that in this presentation, coming in, capital coming in to pay down some debt, buy back some shares, And as a team and as a board, we're sitting down and strategising, as we look into 2026, how we manage our capital for the best risk-reward for our shareholders, both in the short term to manage that discount to NAV, but also for the longer term in adding new portfolio companies, and that's a broader discussion point. Moving on to slide three, the key highlights and numbers I've touched upon of the NAB in dollar terms up 6.9% and 22.9% for the quarter and for the year, year on year. And from a SEC point of view, a healthy quarter of 4.6%, not a lot of currency diversion, and up 2.8% for the year. Share price obviously being weaker, flat year on year at the year end, and up 3.3% in the quarter. And in slide five, this is a chart we show every quarter, and what you're starting to see since year end 24 is a gradual pickup in the NAV in dollar terms to now $434 million. As I say, there is the micro level of our portfolio companies, but then obviously it feeds down from the macro level and the cycle level. Venture capital, capital is in a better place. Capital is flowing. Macro is in a better place. The companies that we're invested in, quality companies are starting to grow again, and that's feeding through to a growing NAB, which is key, obviously, for everything that we do here at VET. And I'll exit sort of the path and ask you if there are any of you who want to come here, and I'll come back on some key points before I open up for questions.

Thanks, Dave. Hi, everyone. Yeah, just looking at slide five, which highlights the evaluation approach and key takeaways for the portfolio in the quarter, the main mover there is credit tasks are moved from mark to model in the previous quarter to this latest transaction. priced at the $108 million Series G round that they closed in December, which resulted in a $33 million uplift to the NAV. The rest of the top three names like Confeo and JustPay remained at mark-to-model and latest transaction respectively. which results in the portfolio being valued on 69% at latest transaction and the remaining 31% of the portfolio being valued on a mark-to-model basis. And of those 31%, 90% plus of those mark-to-model valuations reflect multiples further down the P&L, i.e. like below just the revenue multiple. Moving on to slide six. So on slide six, we just break down the NAV evolution in the quarter and we show the breakdown of that and how it's attributed to different factors. So the biggest part of NAV growth in the quarter is attributable to credit houses round and the impact of that round on the valuation of the company. In the portion of the portfolio that's marked to market, you can see the slight positive portfolio growth was partly offset by the market pullback in the quarter. So, you know, the holdings that are valued at mark to model had a relatively neutral impact in the quarter. Just on to slide seven. In slide seven, we show an aggregation of the NAV evolution over the year and how the different parts or the attribution to that over the quarter. So overall in 2025, we saw strong contributions in NAV growth from portfolio performance, the market performance, through comp multiples and also strengthening non-USD currencies. And importantly, we also converted $37 million of our appreciating NAV to cash, which shows up in that net $18 million positive cash position over the course of the year. So in aggregate, there was $81 million of positive NAV evolution As Dave mentioned, that was 23% year-on-year dollar NAV strengthening. And on a per share basis, that's 26% year-on-year once you factor in the buybacks that we did over the course of the year. And then just on slide eight, you know, we use this slide to just reiterate how we continue to feel confident in the strength of the portfolio, the fact that we have a portfolio that's growing 25% to 30% year on year on a self-sustaining basis. And, you know, Dave will – a lot of that is driven by credit tasks, and Dave will get into some of the details of that in the preceding slides. But we're also feeling confident that there's been a change in the environment, far more fundraising activity in our markets. It's definitely heating up and there's been a flight to quality which has benefited our portfolio and we expect to see rounds like credit houses and JustPay to continue to take place and continue to benefit our portfolio and help us improve our liquidity and balance sheet. So, handing back to you, Dave.

Super. Thanks, Alexis. I think from a portfolio point of view, as Alexis alluded to, what's key is that you invest in quality companies and you've got a true cycle performing portfolio. And that's what we're starting to prove out, having gone through the boom years up until 2021, the BC winter of 22 and 23, where we re-evaluate our portfolio and set a valuation mark lower, and then the recovery and the growth that we're seeing in 2025. You get to, you invest in these companies, you live with them through cycle, you see them in the up and the down cycles, and that's how you build longer term value. So we're very happy with the overall portfolio where it is. And we do have tailwinds from an ecosystem VC, capital flows, valuation point of view, all very helpful to what we do. Specific to us, obviously, is credit house. Credit house performs. It's a big part of best performing, as we all know. You know, 12 months ago, these numbers weren't what they are and what you see today. And this is what we said the manager was going to do. And they are delivering. And we expect that to continue into 2026 and beyond this year. And what you have is an improving growth profile at a very managed risk reward basis. They manage their cash flows at a neutral basis. And, you know, in Q4, we'll get to about 20% year-on-year loan growth. Revenues are following that growth. And that's key for future value of credit tasks as it looks to be. At some point in the future, a public company with real value needs to start growing again. That engine has really kicked in. As impressive or as important is what they're doing from a efficiency and cost point of view, enabling AI tools across the business. And you're starting to see that efficiency gains kicking in. So it's getting growth. We're getting more efficient growth, which is the future of this company and the industry as a whole. Besides the numbers themselves, what is key for credit apps in Q4, all these things kind of came at the same time, but they've been work in progress for quite some time. One was obviously the announced Series G funding round, $108 million coming in, and we spoke about that in Q4. The bank license itself was approved in Q4, and that's key, lower cost of funding, more availability of funding, and a franchise uplift for the overall business and its optionality going forward. And in the top team, Riccardo Furcano came in from formerly of BBVA Group, top management. It's the type of caliber of top management that the company is now attracting, not that it wasn't attracting, but it's on the front foot and that's the kind of talent that comes with that. So it's kind of like an ABC trade. So I think from all aspects of Creditas, we're very excited as we look at the company, where it's positioned, the tailwinds that it has, capital position, economics, et cetera, as it goes into 26 and 27. And besides Creditas, I wanted to talk about cash, exits, capital. You know, what's key is we're always looking at our cash and capital position and our balance sheet strength. And then we're looking to make logical decisions around that positioning. At the same time, we're very focused on the short term, more so in the past. And now transitioning as we balance, obviously short term is important, but start to look at the medium to long term for VEP and for all our shareholders. From a cash position point of view, we had $15.9 million of cash and liquid assets at the end of Q4 and that's our balance sheet stronger than it was in the past. But what's key is we pay down half our bonds, but we still have $26.1 million of bonds outstanding. So we're in a negative net cash position and those bonds are due at year end at 26. So any kind of decisions that we make has that in mind and that's a kind of a cash liquidity risk management overlay to everything we do. When that capital started to come in from the exits we did last year, the initial allocation was obvious, pay down some debt, start to buy back your shares. Now that we're net negative on cash, we balance that with how we look to more cash coming in and also thinking about the future and looking at pipeline and balancing all that into a broader strategy. That's all a work in progress at this point in time. What I will say is the key to all of this and us having the tools or the ability to do more as in pay down more debt and we do aim to go debt zero by year end. That's one of our inherent goals. We do have options around rolling the debt, but the plan is to buy back more shares and then put capital to work in new pipeline companies. Key to that is capital in and key to that is exits. We had a very, you know, off the back of promises to investors, we had a very healthy last 12 months in delivering exits, which are hard in our industry. And we delivered three, as I said before, in India and in Brazil via IPO, by M&A and by a secondary sale, the biggest and the most juicy of which was JustPay. But 37 million of gross proceeds came in in the last 12 months. We look at the next 12 months and we're fairly confident that we will see more exits. We're working on the number. By no means is VET a wind down vehicle, but we're taking our opportunities to take capital off the table at NAV plus minus in our companies bring that money in and that strengthens our balance sheet, puts us in a stronger position. And with that capital in play, then we have the range of decisions to make and actions that we took like we did in 2025 around Veth debt and Veth equity. I think this whole ideology is just keeping the market updated in how we're thinking. We haven't set anything in stone at this stage. I would say a lot of it is around our capital strengths. With more capital strengths, you can make more decisions. And then what's the priority? The more capital you have, you can prioritize different things for both short-term and long-term. But bolstering the capital position is key. At best, bolstering our balance sheet, we want to be a strong investment company with optionality of capital. We've paid down half our debt. We would like to go debt-free by year-end. Narrowing the trade at discounts has not gone away as a concept. We're all shareholders. We value our shares. And narrowing at discounts is a key part of anything we do. We cross-reference that with our cash capital position versus our money is due in the bond markets and then we're starting to gradually overlay that with the future and the future growth of best because we look at our portfolio we look at credit tasks just pay confio we look at the path of tinkoff easyco we know we have the muscle to invest in best-in-class fintech companies we know those companies can compound the value and we know we can realize that value and for shareholders as we've seen with tinkoff easyco and more recently with just pay so balancing that long term with the short term It's all part of the strategy that we're doing at the moment, cross-reference with the capital position we find ourselves in today. And just to finish off, so broader investment case, and this is very similar to last quarter. We keep on saying it's about the portfolio. Any investment company is about its portfolio. And I think we have proven through cycle that we have a quality portfolio, that our investment radar is good, that names are now starting to break out and then in terms of growth, profitable growth, and they're raising fresh capital. So we're in a as comfortable and as positive position as we've been for a long time in terms of the quality of our portfolio. And that's the basis for value creation and growth. Then you've got exits. Exits markets are back, but it's hard work to exit. We're proving that, you know, we can exit our positions and we can exit them at the right price. There'd be no fire sales, nothing forced out the door, the right exit at the right time at the right price, strengthening our balance sheet. Then you've got questions around capital allocation. And we look to win the near term as well as the long term and put that capital to work in the most value added way with paying down some debt, with buying back some shares. And now while we're in a negative net cash position, we sit back, we strategize as in when the next capital comes in, you know, how do we allocate that? And then we're debating the short term versus the long term because it's very logical given our track record of investing versus the very short term, obvious traded discount playbook of buying back your shares. We get that. We're very cognizant of that. And within the pipeline, we are flexing that muscle again. We are seeing best-in-class EM FinTech companies around the world. We are excited about names that we could potentially bring into our portfolio. We need to cross-reference that around our A, our capital position, and B, the opportunity to create value for everybody involved by our shares and OCP levering our debt. I will stop there. Operator, very happy to open the floor to questions at this stage.

Thank you. As a reminder to ask a question, please press star one, one on your telephone and wait for your name to be announced. To withdraw your question, please press star one and one again. Once again, please press star one, one to ask a question. To withdraw your question, please press star one, one again. We are now going to proceed with our first question. And the questions come from the line of Lionel Sigurdsson from D&B Carnegie. Please ask your question.

Good afternoon, David and Alexis. Thanks for taking my questions. And starting off with a question on the credit as raised, you could just walk us through maybe some of the details and how this has affected your ownership stake in terms of dilution.

Yeah, like I think last part first, from an ownership point of view, we broadly own what we did before. And we thought there was a lot of moving parts to that in that The round itself was led and underwritten by Anne Bank, who's a key investor in Creditas. And so the capital came in. But there were a number of notes, outstanding convertible notes, of which we held from previous rounds back in 22 and 23. So they converted at a discount to the overall round price. So net-net, we still own the same, sorry, approximately 9% of Creditas. It didn't move that much given the mechanics and the maths of the round. And then from a valuation point of view, there was obviously the headline valuation, but we value credit assets at the convertible note, the discounted note, just to be conservative and in line with our most recent effective capital in.

Thank you. That's very clear. And then a question on JustPay, which we saw putting out some numbers a few months ago, and it's just, you know, any updates on how they're tracking along? What should we expect for 2026? Should we see some moderating momentum or is this going to continue to compound in the same way?

Yeah, Alexis, do you want to grab that? Yeah.

Hi, Laius. Yeah, JustPay continues to execute well. So I think for the calendar year of 2025, the company grew around 40% top line. We are forecasting the company expects to grow at a similar pace This year, I think the big variables within that are, you know, as they've last year was about planting seeds in international markets. And this year is about seeing those seeds like really thrive and start to contribute to the top line. So I think some of the variability about them being able to deliver 40 percent or maybe more will come from their success internationally. And so far, you know, we're feeling pretty strong. There are some large signed contracts which can be quite juicy and fruitful. But, yeah, I'd say, you know, 40% to 50% top-line growth for 2016, similar to 2015.

Yeah, Linus, what you have is you have, you know, you've got the top three, you've got names like Credit House and Compu that are coming back into their own and starting to compound back into that 20% plus growth zone. And they can easily go to 30% given the markets around the time. But JustPay has been compounding at a healthy clip through that cycle. So we do expect a healthier again next year.

I appreciate that. And then my final question was just double-clicking on this near-term capital allocation, how we should interpret those comments on balancing. I mean, should we think some new smaller exit before buybacks are resumed at scale, or is this something you'll be starting in the near term?

Yeah. Now, look, it's a very fair question, and we're not ignorant of the share price. And what I'd say to you is, We're making no firm statement today, and that's not hiding behind anything, but it's very clear that we need to manage our capital position, given what we need to outlay, at least on paper, from a debt point of view by year end. And that was a very cognizant management and board decision when we stopped the buyback, as in, you know, let's get the balance sheet to a more comfortable position for everybody involved. We are comfortable on line of sight of exits. We would like to see those exits coming in. Nothing is guaranteed, but as they do and the capital position strengthens and you go net cash positive, then you have the decision tree whether you keep the capital to pay down your debt. Is that the most important thing? In an ever-changing environment, that may be more important than buybacks. And then you cross-reference that with the clear IRR that you have in buying back your own shares as well as the indication to the market, which is very positive. And then you start to cross-reference that with the long-term value when you see some awesome fintech companies like the ones we've invested in the past that we could potentially add to the portfolio. Now, we're trying to get all our ducks in a row and I think we're being maybe overly transparent and communicative with the market about how we're thinking as opposed to just finishing our thinking and putting it all down on paper. But, I think that we respect the market enough to share as we go. I think we've always done the right thing for long-term value for shareholders. We can't control the share price. That's very clear. But I think to your point, Linus, I think more capital in gives us more comfort to do more across all areas of capital deployment.

Okay. Thank you so much.

We are now going to proceed with our next question. And our next questions come from the line of Stefan Nitson. Please ask your question.

Good afternoon, Dave and Alexis. Thank you for taking my questions. Firstly, on your political situation in South America following like the U.S. operation in Venezuela, have you seen any impact on your business or any increased risks that you foresee going forward after this development?

Interesting. Not really in a specific context. In a global context, clearly there's a lot of moving parts geopolitically and the US is at the forefront of a lot of them. And these are unpredictable. We wouldn't expect anything to happen in any of our investment countries in Latin America or elsewhere similar to what happened in Venezuela. I think it was a very specific case in point. And obviously we like the event. We like the outcome of the event. But the event itself and the nature of it was tricky let's say at least but um no i think from a from the landscape in latin america the markets that we look at brazil and mexico haven't been touched really by that um and we talked to a lot of global investors who invest in emerging markets and latin um and even to other markets like colombia chile etc we haven't really seen any impact i think there's a very specific excitement around the potential for venezuela off the back of what happened but it's a country with lots of potential and many possible future scenarios. I think removing bad leadership is only the start, but then the pathway, there's a lot to work on there. We've seen no negative outcomes or volatility or risk to any of our countries. This is all within the domain of the very fluid, noisy, global geopolitical environments, much more than it was in the past.

Yeah, thank you for the update. And then I think, like most of the questions, was answered by Linus' question, but maybe if you can share an operational update on Confio and how their banking license application is going.

Yeah, that's fair. You know, because we've been overweight credit class communication in Q4, and obviously JustPay, Alexis, spoke about, you know, Confio did very similar results to what credit class did in terms of top-line growth. Loan growth and top line growth in the 20% bracket, albeit it wasn't the up curve that credit has had quarter on quarter through the year. It was more sustained through the year. It is a bank that can do a lot faster growth. I think credit has come to the same given the time that their environment's in. So it can easily do 30% growth plus as you look into 2026. But I don't think it'll start off that way. I think it'll gradually, Q4 is generally faster than Q1, so it's going to be picked up. Margins are holding steady and tight. They're cashflow positive. have a strong cash position. And the bank licence, we'll see. It's one where the position that, you know, we've said it before, I think as a Compio's planning life without a bank licence, albeit, you know, we know the benefits of a bank licence. So very clear that it's in line to get one. Just when you're talking about regulators and timing, it's always a risk. The upside is clear, that like credit has getting its bank licence in terms of funding costs and franchise value. But where it comes to, it will get the banking licence. We just wouldn't like to put a time on it because we've been there before with regulators and bank licenses and these things just take time. But the good thing in Mexico is we have seen bank licenses being handed out. So, it's something that is and has happened. So, it's not like it never happens. Okay. Thank you very much.

That was all for me.

Super. Thank you.

We are now going to proceed with our next question. And the questions come from the line of Tobias Carlson. Please ask your question. Your line is now open. Please ask a question. your line is open. Maybe you are currently on mute.

Yeah. Thank you. Thank you for your presentation, and I have two questions. The first one is, that I can read in your report that you underlined that you want to make new investments and I wonder how you're going to finance them considering that you also want to reduce the debt and perhaps also buy back shares. My second question is if you intend to try to reduce the discount to net asset values as it's 50%. right now. Thank you.

Great, Tobias. Thank you very much for the questions. I think our sharing around our direction of travel has been bigger picture and broad as opposed to specific. We didn't mean to mislead our investor base in what we're doing. We are an investment company. We are working pipeline, we are very keen to get best in class FinTech companies around emerging markets into our portfolio. It's been part of our muscle and our job for the last 10 years. So when I say we've been building that muscle again, we've been out there looking for these best in class companies and that's part of our job. At the same time, when we looked last year and the year before, it was very clear priority around strengthening balance sheet, getting capital in, putting capital to work where it was most clearly needed. de-levering, paying back the debt. And that's there still as a goal for this year. There are 25 million plus minus to go. And clearly to buy back shares is part of the IRR given where best shares currently trade. What we did was we paused effectively in Q4 of last year around the buyback and pushing the debt for now because of our cash position going lower than our debt is due at year end. And we wanted to continue to strengthen our balance sheet. It's a general top-down statement where we are looking to transition to getting Beth back on the front foot investing. The debt still is very much there. It has to be paid. It will be paid. Our shares do trade at a deep discount to NAV. And there's many ways of delivering, closing that discount to NAV. And we have been working, focusing on communication, investor relations. We bought back some shares last year, transparency for our bigger companies. exiting our positions at nav plus minus to prove that our nav is real and we continue to work that mandate there's many ways of attempting to we don't control the share price but attempting to decrease that discount enough and it's in our interest as much as all shareholders interest to have that discount lower if even non-existent that is part of our short-term medium-term goal um we stopped doing everything for now until we get the capital in and we're just strategizing around these things. And there will be a priority depending on how much capital we get in, what pipeline companies we see, the IRRs in those pipeline companies versus IRR on our shares versus buying back the debt. So I think it's all just there. I think our track record last year was buying back shares and paying down debt. We're just talking about the three different aspects and saying that we're ready to go on all. But with $15 million of cash and $25 million of debt, we just paused. took a moment, strategy, discussing, and we're really focused on the exits because with more cash, we can do more things. So that's on balance sheet. We're also looking at potentially doing off balance sheet structures. We can use our investment muscle, our ability to find on the right, get allocations, invest in Class FinTech, but do it off balance sheet by potentially SPVs. So it doesn't have to be A, on balance sheet. It can be B, off balance sheet, which doesn't touch Beth, but can benefit Beth in terms of fees, carry, and different ways. So we're just looking at all of this. We're discussing it internally. We're positioning ourselves Maybe we're opening too much to the market, but I like to share as we go, and I like to listen to the market, and the market speaks very clearly. We take all that on board, and we try and make the right decisions as we go.

Thank you.

Thank you. We have no further questions at this time, so I'll now hand back to you, David Nangle, for closing remarks.

Yeah, thank you. Look, thank you, everybody, for following us, for the interest in our story and our talk. We have people coming in asking questions by email. Otherwise, we'll come back to you for sure. We're very happy with where we're at in terms of our portfolio. That's key. You can't do anything with a strong portfolio. We're very happy where we are in terms of cash generation and delivering exits. It's not every investment company that's in a position like us being able to do this. It puts us in a strong position. And then we're very clear and maybe overly leaning in around our thought process around what we do on capital allocation as we look forward. Watch this space. We'll be more clear as we go forward as capital comes in. But we're listening to the market as well as trying to make the right decisions for VET both short-term as well as long-term. But thank you.

This concludes today's conference call. Thank you all for participating. You may now disconnect your line. Thank you.