• NAV (Net Asset Value): $353 million at year-end, down 26% quarter-on-quarter in USD terms, and nearly 20% in SEK.
• Creditas Origination Growth: 17% quarter-on-quarter, nearly 50% year-on-year.
• Creditas Valuation Decline: 44% quarter-on-quarter due to macro factors and peer multiples contraction.
• Transfergo Valuation Decline: 32% decline reflecting peer multiples contraction and weaker FX.
• Gringo Valuation Decline: 11% decline quarter-on-quarter due to FX impact.
• Just Pay Growth: 6.5% increase in valuation despite a 6% decline in comps and 2% currency depreciation.
• Nivo Growth: 2.6% increase quarter-on-quarter with stable comps and 16% company growth.
• Portfolio Performance: 35% to 40% expected revenue and gross profit growth for the next 12 months.
• Exits: BlackBuck IPO and Gringo sale, bringing in $17.2 million in cash and $5.2 million in listed assets.
• Cash Position: Pro forma liquidity position of $33 million post-exits.

• Warning! GuruFocus has detected 4 Warning Sign with ABT.

Release Date: January 22, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• VEF AB (FRA:0TX) achieved two successful exits with BlackBuck's IPO in India and the sale of Gringo, bringing in $22.4 million in total.
• The company expects 35% to 40% top-line and profit growth for the next year, indicating a strong growth trajectory.
• Creditas, a significant portfolio company, showed a 17% quarter-on-quarter origination growth, nearly 50% year-on-year, driving profitability.
• The portfolio is largely break-even and self-sustaining, with over 90% of companies not dependent on fresh capital for growth.
• VEF AB (FRA:0TX) is focusing on strengthening its balance sheet, with plans to use capital for share buybacks and debt reduction, enhancing shareholder value.

Negative Points

• The company's NAV decreased by 26% quarter-on-quarter in dollar terms, primarily due to macroeconomic factors in Brazil.
• Creditas experienced a 44% decline in valuation quarter-on-quarter, driven by macro factors and peer multiple contractions.
• Transfergo's valuation saw a 32% decline, reflecting weaker FX and peer multiple contractions.
• The Brazilian real depreciated by 12% in the quarter, negatively impacting valuations.
• The NAV per share in SEK decreased from SEK4.26 to SEK3.73, reflecting the challenges faced in Q4.

Q & A Highlights

Q: Can you discuss the macro risks you see, particularly in Brazil, and how they might impact your operations? A: David Francis Nangle, CEO: We are aware of the macro implications in Brazil, including currency and peer valuations affecting our companies. Brazil experiences periodic economic fluctuations, but our companies are built to withstand these cycles. Creditas, for example, has shown no change in its 2025 plans, and while interest rates have fluctuated, the impact on margins has been manageable. We remain vigilant but confident in our portfolio's resilience.

Q: How has the year-to-date performance of the Brazilian real and peer benchmarks affected your valuations? A: David Francis Nangle, CEO: Year-to-date, the trends affecting our valuations, particularly for Creditas, are net positive. The Brazilian real has shown some recovery, and peer benchmarks have improved. We aim to be dynamic and real-time with our valuations, acknowledging inherent volatility, but recent trends are encouraging.

Q: There seems to be a revision in your growth projections for the portfolio. Can you explain the changes? A: Alexis Koumoudos, CIO: The revision from 40% and 60% growth in revenue and gross profit to 35% and 40% is due to our portfolio companies maturing. Larger companies like Creditas have reached more stable gross margin profiles, leading to growth in gross profit aligning more closely with revenue growth.

Q: Can you provide more details on the recent exits and their impact on your capital position? A: Alexis Koumoudos, CIO: We completed exits with BlackBuck and Gringo, bringing in $22.4 million in total. These exits strengthen our balance sheet, moving us closer to a net debt-neutral position. We continue to focus on selective exits to further enhance our financial flexibility.

Q: What are your plans for capital allocation following these exits? A: David Francis Nangle, CEO: Our capital allocation strategy focuses on strengthening the balance sheet, including debt reduction and share buybacks. We aim to leverage our cash position to create shareholder value, with a long-term view of reinvesting in high-quality opportunities as they arise.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.