Release Date: July 16, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- VEF AB (STU:0TX, Financial) reported a 6.1% increase in NAV year-to-date, with a 5% increase quarter-on-quarter, driven by market multiples and favorable FX conditions in key markets like Mexico and Brazil.
- The company has successfully executed three exits in the last 12 months, including an IPO in India with BlackBuck and a trade sale in Brazil with Gringo, strengthening its balance sheet.
- VEF AB (STU:0TX) has initiated a share buyback program, purchasing $4 million of its shares, which are trading at a discount to NAV, enhancing shareholder value.
- The portfolio is expected to achieve 30% to 35% revenue and gross profit growth over the next 12 months, with a focus on cash flow positive growth.
- The company has reduced its debt significantly, paying down SEK160 million in the quarter, improving its financial position and flexibility for future investments.
Negative Points
- Despite positive trends, VEF AB (STU:0TX) acknowledges that it is still early in the cycle, with some lag in the investment company universe catching up to market momentum.
- The company has baked in more conservatism into its valuation models due to macroeconomic uncertainties, particularly around interest rates and credit impacts.
- The SEK has strengthened against the US dollar, resulting in a negative high single-digit impact on NAV and NAV per share year-to-date when measured in SEK.
- There is ongoing volatility in the macro environment, which could potentially impact the company's portfolio performance, particularly in emerging markets.
- While the company is optimistic about its pipeline, it remains cautious about international expansion, acknowledging the challenges of operating outside home markets.
Q & A Highlights
Q: Could you provide more details on the negative contribution from portfolio performance in the mark-to-model holdings? Is this due to a general haircut or a negative macro scenario?
A: David Francis Nangle, CEO: The negative contribution is due to macro volatility, not specific company issues. We are being conservative in our forecasts due to potential impacts on rates and trade flows. Alexis Koumoudos, CIO, added that the macro uncertainty mainly concerns rate outlook and its impact on credit across the portfolio.
Q: Can you elaborate on Juspay's strong growth momentum and operational performance?
A: Alexis Koumoudos, CIO: Juspay consists of two core businesses: the merchant business and the UPI business. The merchant business is seeing a reacceleration in growth, and we expect it to grow faster than the UPI business this year. Additionally, Juspay is gaining traction internationally, signing contracts with benchmark names in new markets.
Q: How should we think about capital allocation priorities between debt paydown, buybacks, and the investment pipeline?
A: David Francis Nangle, CEO: Currently, the priority is share buybacks due to their obvious value accretion. We've paid down a significant portion of our debt and are focusing on the investment pipeline for medium to long-term growth. The strategy will remain fluid, adjusting to market conditions and opportunities.
Q: What is the impact of macro uncertainty on your portfolio, and how are you addressing it?
A: David Francis Nangle, CEO: We are incorporating conservatism in our forecasts due to macro volatility, particularly concerning rates and trade flows. This approach is balanced by positive tailwinds from FX and multiples, providing a buffer for valuations.
Q: What are the key growth drivers for your portfolio companies, particularly Creditas and Konfio?
A: David Francis Nangle, CEO: Creditas is experiencing strong loan origination growth, which is driving its income statement. Konfio is seeing significant portfolio and origination growth. Both companies are benefiting from a focus on sustainable growth after achieving cash flow positive operations.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
