VNV Global AB (publ)

Good afternoon, everyone. Welcome to VNV Global's second quarter 2024 conference call. On the call today, we have Per Birger, CEO, and Dennis Mohamed, who's a member on the investment team, and myself, Björn Fosslid, who's the CFO of the company. As per usual, Per will start with a summary of the developments during the quarter and a few highlights out of his management letter. And then I'll follow with some NAV drivers and then we do Q&A. And as a reminder, if you want to ask a question, please use the Q&A function here in Zoom and we'll try to address your question towards the end. With that, I'll hand over to you, Per. Please go ahead.

Thanks, Bjorn. So we just flicked through a couple of pages highlighting what's been going on here. $600 million NAV, which is just under 49 Swedish crowns per share, which is down 10% on the quarter, which is basically a reflection of the multiples that we follow in the peer universe. in the public universe that we use for our valuation work has been falling in this manner. And then also, of course, we signed... We sold GET. I mean, we get to close it and we can talk more about that later, but we sold GET and that was slightly below NAV. So that's also contributing to this NAV being a touch lower. If we flick to the next page, I think... Yeah, that page. So I think most of you are well aware of this transaction. We've spoken about it a lot. But in this quarter, we did announce that we had sold Get. All of Get has been sold to a company called Pango. And our... For a total of $83 million net to us, of which $70 million we get on closing, and then another $30 million, $13.13 will come in installments over a few years. And that's not an earn-out. It's an escrow. We, as sellers, provide the buyer with... sort of a pack, you know, cash and security. So we've indemnified them for that the things like tax and legal stuff, et cetera, is like we've said it is. And we're very confident that it is, but it's customary. this part of the world to sort of leave some money in escrow that is then released as it becomes clear also that the company is in the shape it is. So it's a long winding explanation of that. But anyway, that's the difference between 83 and 70. And yeah, this is now waiting for Israeli antitrust to... study that this sort of acquisition or merger of pango and get doesn't decrease competition now pango is like a parking app uh parking parking um product in Israel. We have one in Sweden called Easy Park and I guess that's European. So it's that type of service. So it really doesn't alter the competitive nature of either the parking business or the taxi business. So I don't think anyone is really concerned that this will not go through. But both Pango and Get are very large Israeli brand names so it's very customary that the authorities they take a good look and they ask for a lot of data and they go through the data and we're in the midst of that process now but we've seen nothing that sort of gives rise to concern that it's not going to close when it's going to close it's difficult to say because they're going to sift through the data it's summer it's all of that but we have no reason to be concerned that it won't close So that's Get. If we flick to the next page, you see our portfolio looks as of now, before we've actually sold Get or closed the portfolio. the sale of GET and then on the right hand side, you see how the portfolio looks as if GET was sold by the end of June this year. So that renders a portfolio where blah, blah, blah increases and well, GET is gone essentially. And we've also paid back our debts and have a small cash balance to the order of like $5 million before we get the inflow of this escrow. That $13 million will be released over a couple of years, and that will obviously increase that, but there's a small cash net positive if we would have closed GET on the end of June. So you get a picture of that. I think what we'll do now is have Bjorn go through the mechanics of this balance sheet and NAV, and then I'll come back and do some commentary on the actual underlying businesses.

Sure. Thank you, Per. I'll walk through our balance sheet quickly and then the top three holdings and the movements during quarter before handing back to Per. And if we start with this, I mean, as Per mentioned, NAV is at 48.6 crowns per share or $4.58 per share at the end of June, down 10% in both second and dollar terms over the quarter, primarily driven by BlablaCar, Get and Housing Anywhere. Leads us with an investment portfolio of some $670 million or 54 crowns per share. Cash and cash equivalents of $14.6 million following the redemption of the remaining 2021-2024 bond earlier this quarter in the order of 306 million crowns that we repaid in June. In addition to the $14.6 million in cash and cash equivalent, we also have $2 million in liquid and management investment. So all in all, $16.6 million in liquidity at the end of the quarter, which is some 1.3 crowns per share. So all in all, it's a gross portfolio of 55.5 crowns per share. And then the borrowings at the end of the quarter following the redemption of the The June 24 bond is $81.2 million or minus 6.6 crowns per share, which leads us with 48.6 crowns per share NAV at the end of the quarter. Still trading at a significant discount to that NAV. If we move to the next slide, Dennis, we have the portfolio companies. If we start with BlaBlaCar, the main driver over the quarter, down 14%, primarily driven by peer multiples in our EV sales valuation models. There's also some FX in that, and more than two-thirds of the NAV down awards adjustment this year of $42.6 million is BlaBlaCar. Second is Esket, which Per mentioned that we agreed to sell, not yet closed, but at this core branding, we've valued it on the basis of the ongoing transaction, which is down approximately 11% versus the valuation-based model we used at the end of Q1. Voy here is completely flat over the quarter, still valued on the basis of the transaction from earlier this year. companies performing well. And finally, as mentioned, one of the other key drivers of the NAV this quarter was Housing Anywhere, which similar to Blah Blah, and there's some overlap in that peer group, is down 14% or $7 million over the quarter. All in all, private value change over quarter is some $61.7 million. If you just look at the top three names again, it's becoming an increasingly concentrated portfolio. BlaBlaCar represents approximately 21 crowns per share or 43.4 of the NAV. This is pre-GET being sold as of June 30th. GET is still or soon to be cash, hopefully 11% of the quarter or 6.7 crowns per share. And then if you look at void, it's approximately 6.5 crowns per share. So all in all, the top three largest holdings is just over 34 crowns per share and just above 70% of the total NAV. I mentioned the cash and that the large movement during the quarter is due to the repayment of the bond. And if you look at the net debt figure, it's down significantly from year end 2023 and slightly up over the quarter, given some optics as well. And with that, I think I'll pause and hand over back to Per before moving into the Q&A.

Okay, thanks, Bjorn. Yeah, so a couple of points on the larger names in the portfolio. BlaBlaCar is doing well. I think you've all seen it close last year with about $250 million of euros rather of revenue and a positive EBITDA, positive cash flow. And so the company is doing well. I know there's a downtick in our NAV, which looks maybe funny as the company is doing well, but it's a factor of that the peer group has fallen and there's some FX in there and We made some adjustments, but the underlying sort of business is doing super well. We're very excited that they have finally been able to close some M&A. So as we wrote in our report, they have acquired Obilet, which is the bus marketplace of Turkey. Now, we've seen historically at BlaBlaCar that they're Their carpooling business is very synergetic with bus marketplaces. We saw that when they acquired Bus4 in Ukraine, which also had presence in Russia. Now that's a separate story with no value for us. But the experience of merging those type of assets was very, very strong. So now Turkey is a little different because their carpooling penetration is not as deep as in Russia. some other countries but au billet on the other hand is really sort of i mean dare say dominant in the bus marketplace side side of things so it's um that's a it's a that's a very natural acquisition uh that that is yet to close uh we expected to close during this quarter the quarter we're now q3 And hence, we'll update our model on BlaBlaCar after it's closed. So I think when we speak in order, you'll see that in the figures and you can get a sense of how large. But it's essentially profitable growth, which is very accretive. And yeah, elsewhere, it's companies doing fine. So get we've talked about a little bit, business wise, although we've sold it now, yet close, but this is doing well. So it's really sort of recovered in Israel to very close to pre-crisis sort of levels. So that's encouraging to see. And again, I would really expect this to close in the not too distant future, although we can't really control how long it will take. VOI, I think there's nothing more to add apart from what we've written in the report, but Full company EBITDA positive. And I mean, us lot here, we think that they have very good possibility to be EBIT positive during this year. And that's, of course, very encouraging. I was discussing earlier today with someone about that VOI. I really think there's sort of leverage in sort of how people look at our portfolio when we have, especially VOI, looking back at being EBIT positive. That sector has been sort of plagued with a lot of competition and everyone has had an opinion about it. But now, as I think we've talked about before, the sector is really sort of heading to two dominant players, Voi and Lime, all across Europe. And there's some other presence here and there, but those are really sort of more and more becoming the larger ones. And with that also, it's easier from a distance to sort of understand how economics will look, I think. And that combined with looking back at a year of EBIT, I think is, I mean, we'll have... big effects on how Voi itself is, I mean, how we mark Voi, but also how Voi is perceived as a part of sort of the valuation of our company. They've also won a couple of tenders, Solent in England and Antwerpen. And Antwerpen's a five-year contract. So... We haven't spoken much about housing anywhere of late. I'm very excited about housing anywhere. I mean, I really think there's an opportunity for one player to become a dominant sort of force in rentals at large in Europe. I mean, you can do rentals on all the real estate classified verticals across Europe, but all those companies... none of those companies really sort of give a lot of love and focus on the rental category so this is there really is an opportunity to become a big european one housing anywhere have they have their competition but they're they're the largest in europe but they have their competition but those that some of that competition is struggling so there's also an opportunity for say consolidation or to sort of gain presence and crucially liquidity in areas where maybe competitors are becoming less strong if at all present. But yeah, and so it's about building some liquidity growth, but Whilst they're doing that, they are showing double digit growth and are basically at EBITDA profitability. So good. Neumann, the run rate of revenue is up 100% year on year and they're EBITDA positive. So that company is really performing well. And that's very encouraging to see. For those of you who had the chance to look into the recording of our CMD, I hope you had the chance. If not, then I'd encourage you to look at Breadfast's presentation. Breadfast, Egyptian quick commerce player. which is at an ARR of $150 million in revenue now, which is an amazing 38x since we invested in 2021. And so cohorts are just great, and it's becoming a very, very well-designed and broadly loved brand in egypt i really get the sense that this is this is like a gojek which become a gojek of indonesia the ride hailing platform which became a very large and loved brand in indonesia in the same way breadfast is really there in egypt But upon that, they're also building sort of a presence in finance, in fintech, with wallets, et cetera. So I really, I get a sort of a go-get kind of feeling around Breadfast and feel that let them perform over a couple of years and our holding in Breadfast could well be maybe the largest position in our NAV, depending on how all the other ones have developed. But yeah, yeah. There we are. So that's a few comments that I hope are helpful to get sort of some feeling around the portfolio. Portfolio at large, which I think we have a final slide that we can look at, is becoming increasingly a bit dark positive. So we have... Yeah, it's up this quarter, 62% is EBITDA positive, another 12% if you add VOI, but VOI with the assets that they run, the scooters, we should really talk about EBITDA positive. but it's encouraging to see the portfolio performing. I think the big changes here is Newman and I think also Hungry Panda becoming a bit positive and thus contributing to the portfolio becoming increasingly sort of as a percentage a bit positive. I think we'll stop there and open up for questions. And we have some Dennis, are you going to organize this?

Yeah, for sure. I'll... moderate the Q&A. We've gotten one question to start us off with, and I'll read it up in a second. Just an encouragement, if you have any questions to ask, please just use the Q&A function in Zoom and we'll let you, we'll make sure the question is asked. So the first one, maybe Perry, you can comment on it, is around buying back the Vinvis stock. How should one think about that going forward now that we potentially enter a net cash position post sale of Get?

Yes, that is a good question and one that's very close to heart. We're ready to buy back stock. We have the approvals. And, uh, yeah, we're, we're all set up to buy back stock. We, we, we, I think you should expect us to see the get transaction close, uh, in, in order for us to go into real net cash. Uh, and, uh, and, uh, then I would, um, I would, I would be very surprised if you don't see us, uh, getting involved in the, in the market for our own stock. Um, But we essentially need to get the transaction to close. So we hope that will happen imminently. And then we can start looking at our own stock because legally and formally, we're all set up to do it. And it's very, very difficult to find something that stacks up better than our own stock at these type of levels. But we need sort of the liquidity to be in order and sort of the bond to be out, which essentially it can be when we get the cash from the get transaction.

Thank you for that. Another question here is around portfolio company exits. So the question is essentially, which portfolio company do you think is closest to a sale or an IPO? I assume not only for V&V, but at large, it sounds like.

Yeah, IPO, I think that would have to be BlaBlaCar. Now, BlaBlaCar is not like an IPO this year, and I think at best maybe sometime during the latter part of next year. But that would be the big one. I think you've all heard the CEO and people around the company talk about an IPO. So that's clearly something that's being discussed. developed, although not sort of formally announced. And also the size of the company is and the maturity of the company is something that caters well to sort of an IPO. There are others that will IPO in time, but of the ones in the portfolio, I would probably say that Blabla is still the one. So to be able to sort of to go down the IPO route the closest in time, even though sort of a year and a bit, maybe it's not close and it's yet to be sort of announced publicly, of course. Boy, I think we'll be very, with EBITS positive behind you and growth in EBITS over the course of 25, I think should leave the company in a good position to also look at public markets a little bit after BlaBlaCar maybe. How Say Anywhere is not really close and the others. I guess Bukka Direkt because it has so many sort of, it rings so familiar to Hemnet in so many ways and Hemnet has been such a success. Now Bukka Direkt is much smaller, of course, but it still has the same sort of deep penetration in Sweden and has the sort of the maturity level to go down an IPO route at some point. But all of those are probably a touch later. So I'll probably say that It would be blah, blah, car first with all those caveats, et cetera, that it hasn't been decided. But you've heard them talk about it.

Thank you for that. Another question, this time from Inay Opsun at SEB. A question on the cash balance. How do you view the liquidity situation and are there any further exits on the agenda?

Yeah. So if we would have sold Get today or end of June, we would have $5 million plus. So But yeah, so however, while we've been in this phase of executing exits in order to pay down the debt, we've always sold Look-See and now we've sold Get and that gets us to being net positive, net cash positive and pay back the debt. But we also sort of have started a plan B and a plan C. So there is a handful of... companies in the portfolio that we are entertaining or not entertaining, that we're quite advanced on actually, on getting some liquidity out of. And that will, should all those fall into place, then we have a serious cash balance at the end of the year. But they're not done yet. I would say that our cash balance with everything else the same, sort of just putting everything else aside with coupons and some OPEX and new investment, putting all that at sort of basically zero. Our cash balance towards the end of the year should be between 20, but possibly 20 to, yeah, even 60, $70 million. But there's a lot of, For us to end the year at that larger sort of level, there's a larger transaction that has to happen and that's not done yet. But we're definitely working on it. But I feel pretty good that everything else aside, we would end the year with about 20, something like that.

Thank you. Moving on, another question is around, do we plan to keep any of our more mature companies as a cash generator that can be used to invest into new ventures? And if yes, in what timeframe do you think we would have such a company in the portfolio?

But I absolutely, I mean, that's been a longstanding ambition. I think we've talked about it before, but we'd really like one of our holdings to develop into what Avito was in the last year, where Avito, I think in the last year, got us like $13 million. and the following year is going to get us $20 million, something like that. And, you know, those kind of figures gives you an ability to not only pay all your OPEX, but also pay down or also do some new investments. I think with $20 million, we paid our OPEX and did sort of three new boys at the time. We only did one boy, but boy started as like a $5 million check. So, yeah, that's absolutely the ambition. I would say that, well... Get is already there. Now we're selling Get and I think that's the right thing to do, both in terms of their return profile, but mostly, of course, to pay down the debt, because I think that's very... All of us as shareholders want that to happen, to have that sort of load of coupons in the past, not in the future. And... But BlaBla and Voi really are the ones. BlaBla, of course, already now. But I mean, as difficult it may be to sort of see because the history of Voi and with the competition in that space, I really think that company in a few years will be in the same sort of position. But the ambition is absolutely there to have one of our holdings And then perhaps also to get them all the new holdings, which has a much shorter path to becoming a real cash flow generator. I think companies like ours and similar ones also listed around the world, but also in Stockholm, I think they do very well out of having a cash generator. I mean, you've seen us trying to rely on raising cash by exiting stuff. And we did IPO a couple of companies, right? but both with quite disastrous outcomes. So it's very difficult to sort of rely upon the sort of exit markets always being open when you need new cash. So hence the sort of the quest to have a cash generator in the portfolio that you can sort of not only pay your bills, but also do some investments even when times are tough. So anyway, sorry for long winding answer, but yes, it's the short answer to that question. Perfect, thank you.

Another question, moving into some portfolio company specific questions here. On Voi, it has been valued at transaction in this quarter, but what would the transaction, what would the valuation have looked like in our books if we would have gone to model? Is there a view on how that has developed over the quarter? I'm happy to give a view or do you want to go ahead?

Dennis is our Voi expert, so why don't you address that?

No, for sure. I think looking at, we always obviously compare when we use a transaction input, we always compare to our model to see that there's not any large deviations. In the case of Voi, we could even move over to an EBITDA-based model and get to valuations or get to a market that is in line with or actually even a bit of a premium to the transaction that we have it carried out currently. looking at 24 and and that's that peer group would would be you know there isn't the perfect pair group for voy but but but there are definitely market mobility companies out there that we can look at and use and and at quite conservative EBITDA multiples even rich evaluation in line with or even set a premium to to the last transaction mark that we have it carried out currently We typically hold our marks up to a year on transaction before moving over to model. So that's why this transaction happened in Q1. So it's still on the back of the transaction. Another question from Rahat at Cantor Fitzgerald. In terms of the primary and secondary transaction environment currently, what are you seeing in terms of valuations? More of down rounds or are valuations going up? The reason he asks is that we've said that we are in advanced stages of exiting some portfolio companies. And the question is essentially what type of pricing can we expect in in a secondary transaction.

Yeah, no, we're not in a, you know, now that we've sort of sold Get, we're not in a situation where we need to sell. We're not stressed to sell. I think both Booksy and Get were executed in also a very orderly way I don't want to give the impression that those were sold under any stress at all and I mean they were both sold a touch below NAV but really around NAV given the sort of the difficultness of pricing sort of illiquid assets like the ones we have I think those were sold in line with NAV and so with no stress but But of course, they have given us even a better situation. Those sales have given us an even better situation now that we really don't have to sell anything. So anything we sell now is really just if the price is fair. And if also portfolio-wise, we'd like to concentrate even further, if we can, on true sort of network effects, real sort of winner-takes-everything kind of models that you see in our portfolio, especially BlaBlaCar, I think. And so for portfolio reasons also, you know, so price and portfolio reasons would be the reason sort of to look at selling something going forward. And the handful of ones which are sort of advanced are all, you know, around NAV, maybe also one of them also above NAV. So really, in relation to NAV, I think very constructive. So all of these things we haven't done yet. So if we would have done them, we would have told you. So if we haven't done them, then of course, there's risk that they don't happen. But as as before i think there's two smaller ones i think look pretty good uh and i think those will be able to talk about in the next quarter uh and then and then larger ones we'll see thank you pair one final question at least for now so so please type in your questions if you have any um

This question, I think, Bjorn, you can answer. So equity investments under 10 US dollars, million US dollars, had a fair value change of around $12 million in this report. Can you provide any additional color on what grew that revaluation?

Yeah, sure. And so this is for the six-month period, if I understand the question, where the fair value change of the line equity investments on the $10 million is down 12% during the first half year. Here for this, and as you can see on the investment disposal column also, which is $47 million, we have essentially the entire Verdane portfolio transaction. moved on this line, hence the inflated numbers on this line for the full six months. So the primary drivers of that travel change during six months is the fact that the Verdean transaction was completed at the discount to the NAV at the time. Perfect. Thank you.

I think we... I think that is it. I don't think we have any other additional questions. So, handing back to you, Per, if there are any final remarks before we close the call.

Thank you, everyone, for listening in. I feel very good about the portfolio. I feel very good about... hopefully next quarter talking about having close get and become, you know, really putting the, the, the debt stuff behind us. And then I also sense apart from some other smaller exits, I really sense that there's some exciting stuff coming up in the autumn that, that, that will be interesting to follow around. Yeah. Both maybe some disposal, but also new investments. Of course, we look at our own share price, but first and foremost, we need to close that get and that should be done. imminently I hope and yeah anyway look forward to talking to you in three months have a good summer everyone