Good morning from New York, everybody, and good afternoon to all our followers in the European time zone. Welcome to our Q3 results conference call.

I am joined, as always, by our CIO, Alexis Koumoudos, and we will spend the next 20-30 minutes running you through the highlights of the quarter, as well as taking all the questions that you have. Moving on to slide 2 of the webcast and the slide deck that is available online.

Key events of the quarter. I put 4 key events here, and these lie below the headline NAV, which was flattish for the quarter and flattish year-to-date, and it really gets into the portfolio and then capital allocation.

One, Creditas, obviously our biggest holding. It continues to compound and is compounding at an increased velocity.

We are now doing 26% year-on-year on the loan growth side and 30% year-on-year on the revenue growth side. Below the top line, we are getting a nice level of AI-led operational efficiency, and it is becoming increasingly predictable.

More movement from venture capital to private equity, and then on that path towards public equity and an IPO. Point 2 is this high level on a macro level.

Clearly, the Brazil election is in full swing. A lot of the news and noise around.

We did have the first round a couple of weeks back with a very market-friendly outcome, and the markets reacted very positively to a right-leaning government coming in from the current left-leaning government in place with the currency rallying rates, forward curves dropping, and underlying fintech equities and equities on large rallying. So there is fundamental and market-level positives behind these trends.

The second round comes up this weekend. We will get into that.

Below the biggest holding portfolio, we like to highlight some of our smaller names or rising stars coming through, especially when they start to share more information. Abhi, a company we invested in 5 years ago, broke the $100 million of total of average run-rate revenue mark profitable over $10 million in the UAE, and it has got an IPO process in the domestic Pakistani market, which is important for the company, which I will double-click on.

From a capital allocation point of view, it was really a quarter where we reached that milestone of paying back our bonds. Very grateful to our bond investors for their support and then put in place a revolving credit facility which is much more suitable to our needs, better size, mechanics, et cetera.

So a real positive step in the whole area of capital allocation and moving from paying down debt to buying back our shares. On slide 3, just the numbers themselves.

Not much to talk about because it is a broadly flattish quarter-on-quarter from a NAV per share in dollars, and in local currency SEK. I will pass the mic to Alexis because there is a lot going on under the hood of that NAV for slides 4 and 5 around NAV movements and the portfolio companies involved.

Alexis?

Thanks, David. Hi, everyone.

Just double-clicking a bit on the valuation approach that makes up our NAV. Essentially, the split between valuations marked to latest transaction and mark to model is relatively unchanged quarter-on-quarter.

71% of the portfolio is marked at latest transaction, 29% at mark to model versus 70/30 in the last quarter. There is one methodology refinement that we have had in the quarter, which is in Abhi, which I will come to in a little.

Our 2 largest holdings continue to carry the marks of recent and plausible transactions. That is Creditas which is held at the $108 million Series G, closed in December, and Juspay at its $50 million Series D follow-on, which was closed in January, and priced at our secondary sale in that round.

Both marks are unchanged quarter-on-quarter. Both companies continue to deliver strongly post-raise, and we sense check both against traded comps every quarter.

Within the mark to model book, Konfío was marked down a further $5.1 million. 2 things drove that.

The peso, which weakened 3% against the dollar over the quarter, and the continued multiple compression across recent fintech comps that drove the peer medians that we use to value Konfío. But underneath, Konfío continues to deliver in line with plan and is reigniting growth.

As in the first half, the markdown is a function of currency and comps. The rest of the mark to model book was mixed but net positive.

Solfácil edged down a bit with the same multiple pressure. Against that, Nibo was marked up, and Abhi marked up as well, both on strong delivery.

I think the one methodology refinement to highlight is that as Abhi has crossed its $100 million ARR and is on its path to IPO-ing the profitable Pakistan business, we have moved the valuation methodology further down the income statement as we did with others. That is like natural evolution of how we value these businesses to incorporate a proper after-tax multiple alongside revenue multiple for Abhi.

That takes total mark to model valuations reflecting a multiple below the revenue line, 790%. Moving on to slide 5.

Just to take you through the NAV bridge for the quarter. As Dave mentioned, the headline for the quarter is that NAV was down around 1%, pretty flat quarter-on-quarter.

That was driven predominantly by good portfolio delivery, but offset by market moves. As you can see on the detail on the slide, within the 29% of holdings valued at mark to model, the underlying portfolio performance added $10 million in the quarter.

Against that, the multiple compression across our traded comps took $10 million off, with the pressure really concentrated in rate sensitive fintech names. FX took a further $3 million off on dollar strength in the quarter.

So delivery, fully absorbed by the compression and currency really was the difference. With 71% of the holdings valued at latest transaction, with no new transactions in the quarter, these were held flat.

At a corporate level, cash was reduced $1 million, which is the ongoing OPEX and coupon payments in the quarter, with no new exit proceeds, and the translation effect from the bond and our SEK liquidity balances net to 0. That gives us the net kind of flattish NAV in the quarter.

Back to you, Dave.

Super. Thanks, Alexis.

While it doesn't get too exciting at a NAV level, at least in the short term, I think what you'll see from the portfolio slides is that growth is compounding, and that bodes well for NAV in the medium to longer term. At a high level, this is a slide we always share of the portfolio.

Generally self-sustaining, which is what we want at this point in the cycle. It's gone from that early venture stage of burning and growing and getting market share to now in this more private equity, healthy growth, but self-sustaining phase.

That growth has really picked up across the portfolio in getting into that 20%-30% range across key metrics for our biggest names. They're out there raising capital.

In the last 12 months, we've seen Creditas and Juspay, a couple of others and smaller names. We expect more in the next 6-12 months within the portfolio because our portfolio is performing, and that will draw in capital.

Specifically, we always have to talk about Creditas because it is important for everything we do at this stage. These are the charts that we like to present.

This reminds me of presenting charts for Tinkoff in the past and Easyco, those gradual up and to the right charts, which we all know, love, and want to be showing for our portfolio companies. This is the ninth quarter in a row of sequential acceleration of growth from Creditas.

It's now at 26% portfolio growth, 30% year-on-year revenue growth. We are now starting to reach that steady state of 25%-30% growth, so I wouldn't extrapolate into the next 20 quarters.

This is something that the company promised, and quarter-on-quarter-on-quarter they delivered, and it's been a joy for us to basically come out there and communicate that because it makes our life easy for our biggest holding and how well they're performing. As important below the top line of the business is the efficiency gains.

We talked about Creditas and AI, and Sergio has done a couple of really cool podcasts on this that I recommend people listen to. The headcount is disappearing as agents take the place of people across various lines of business, from customer acquisition, customer servicing, collections, et cetera.

AI into Fintech 1.0 companies is having a big impact on operational efficiency, and we're seeing it firsthand through the prism of Creditas. These charts speak for themselves, and I expect there is more legs in these charts versus the previous ones in terms of operational efficiency leverage and that path towards profitability and beyond.

It is a very exciting, not just top line Creditas, but bottom line at Creditas. All of these things are key to the formation of a company to get towards being a public company from a private company in due course.

Bringing it back to macro level, we hate to get ahead of ourselves and we hate to focus overly on macro, but our portfolio is a function of country level exposure and country level investor desire. Brazil is in a good place right now.

It is election time, which means it is noisy, but the first round went towards the right, and the market reacted quite clearly as a scene that Bolsonaro will take the presidency. The second round runoff is this weekend, and we will see clear caveats.

What the markets said to us was from a market reaction on equities, names are up 20%-30% that are peers for our portfolio companies. The currency jumped 5%.

Clearly, we have got a BRL portfolio. Nearly 60% of our portfolio is exposed to Brazil, Creditas, Solfácil, Nibo, and they will benefit directly.

Lower rates, better for growth, asset quality margins, stronger currency, better for translation, better comps. You can extrapolate, but it is very clear that the Brazil trade is something that is in focus and our portfolio is exposed to it with the caveat that the second round is held this weekend.

Below Creditas, every quarter we like to grab a name to put out there front and center. Especially when companies are sharing data, which is a private portfolio, Abhi has been sharing more and more for a variety of reasons.

The group ARR is now above $100 million. The regional in the United Arab Emirates is above $10 million from a standing start about 18 months ago.

These are numbers from a company that we invested in from a blank piece of paper, a million-dollar investment 5 years ago into Omair Ansari and his team. As important and as exciting is that the local Pakistani business, which is a sized part of the business, which is profitable and has a microfinance bank license, is IPO-ing or plans to IPO in the next weeks.

That is important for the domestic business, for domestic capital raise and domestic brand and customer, and for winning the Pakistani market. It is not a classic IPO at group level and cash out.

It is within the group, but it is a major milestone and positive for Abhi and thus for VEF. We have to choose Abhi versus others.

I could have easily put Juspay in this quarter. Who is having a great run at the moment, especially on the international side, where international revenues are 20% now of overall revenue stream.

So it has gone from nothing to 20%, and international is really working as it expands outside India. I could have talked about Konfío, which in Q3 has really put the foot down on growth and is starting to coming through on working capital and credit card volumes.

We will leave them for Q4 as we go. Moving away from the portfolio and back to VEF capital allocation, capital ideology.

I think we've been very clear with our messaging to the market on this front over the last, I don't know, 3, 4 quarters. I'd like to think that we message and then deliver and it goes hand in hand.

We did pay down our bonds, the outstanding SEK 300 million of bonds in Q3. Very happy to do that and very grateful to the Swedish bond markets, international bond markets, for supporting us through a window where we needed capital.

We have paid that down and replaced it with a revolving credit facility, a much more appropriate tool for this point in our cycle. It's obviously lower level of exposure.

It's got better rates, 450 bps spread over STIBOR versus 650. It's a flexible drawdown structure.

So flexibility, cost efficient, lower rate. It's better in all aspects of what we do.

It's an indication of travel of where we've gone from requiring the bond markets to not requiring them. Now having a revolving credit facility in place, which is better for us economically and from a business point of view.

From a numbers point of view, we've got about pro forma liquidity of $11 million at this stage. Our net debt is about $4 million at this point.

The facility is $15 million. We'll work on that basis and manage that around exits and capital position and capital needs as we go forward.

In focus for us very much is the fact that we trade at a discount. We do not like this.

We're very aware of it as shareholders in VEF. I think with what we're trying to do at VEF, our portfolio performing incrementally quarter-on-quarter.

We communicate that. We deliver exits at NAV.

The capital comes in. We pay down our debt.

Then what do we do next? We move on to our shares effectively.

It's the most obvious investment company 101 playbook. Not that everybody does it, and not that you can do it all in one go.

It takes time, but you do reap the rewards given everything we've seen from peers and over markets over time. The exits have totaled over $50 million in the last 18 months to 2 years.

We believe we have more over the next 12-18 months. We've used that to pay down SEK 300 million, $30 million of debt.

Now we're in a position where incremental exits and excess capital sits at VEF will be moved towards capital return. Capital return being buybacks effectively for the market.

So watch this space. We're not making any formal capital allocation frameworks or capital return frameworks at this stage.

We will tie that to exit and capital in and the reality at the moment as opposed to theoretically in advance. We just dropped in a slide on Georgia Capital.

We are very aware of the investment company peers in Swedish market and international, both today and over time, because we're always looking for best in class and benchmarks to learn from, replicate, and benefit from effectively. Georgia Capital is a listed investment company in the U.K., but it focuses on the Georgian market as Georgia and the former Soviet Union and at the private equity fund, effectively listed private equity fund, focus on that market across multiple sectors.

They've had a great run of taking their discount 5 or 6 years ago from over 60% to that 10%-20% range. We're very close to that company.

We've done sessions with them and their CEO. The feedback in the playbook is clear about what they've done, the similarities to us, and there's clearly key differences.

We take the learnings for what they are. They had a performing portfolio.

They first paid down their debt. That excess capital in, they bought back their stock.

They kept on having a clear message. They kept on delivering on that message.

Some nuances and differences in that they have a big public listed company in their portfolio, something we would look to do in the future. It's been a performing asset as well, which clearly helps.

A lot of lessons from Georgia Capital, and there's others which we'll bring to the table to show that we don't live in a vacuum. We're very open and aware of what works and doesn't work around the investment company world.

If anything, we're always going to be logical, process driven as we look to build our NAV per share and close the discount to NAV. Then finally, just to close off on everything that we've said.

It's always all about the portfolio. I say this a lot, but without a quality and performing portfolio, nothing else really matters.

Our portfolio, we are very comfortable and confident in that portfolio today, the quality of it, the growth of it, and the fact that fresh capital is coming in to strengthen it and give it fresh valuation marks. The exits we talked about 2 years ago, it was empty promises, and then we delivered.

Now we've got traction. We've got market traction on that front.

We believe we can do more. Then you start looking at what those exits can do for us.

In the past, they have proven our NAV in theory in the market. They've allowed us to pay back our debt.

Now looking ahead, they will allow us to buy back our shares and start to close that discount to NAV and give a decent return for shareholders. Then we can move forward from there, talk about medium to longer term plans for VEF, but that's for another day.

We will stop there operator. I'm happy to open up for any questions that anybody has.

Thank you very much, and good afternoon. We are coming up on a year since the Creditas fundraise, and I am assuming we will see a slightly updated valuation there.

We have seen the encouraging financials in H1, but can you just remind us a bit over the past year how, say, your forward expectations have changed incrementally for Creditas? Perhaps if you could say something about how you think about the way the valuation backdrop has evolved.

Yeah. Hey, Linus.

How you doing? No, look, it is not lost on us, and it is something that we are focusing on and speaking with our auditors on.

Logically, it will be in Q4. It may be in Q1.

There is some date mechanics there, but it is in the coming quarter or 2 quarters that we logically move from last round to mark to model. I think the mechanics which feed into this, one, you have got your starting point of the last funding round, and the valuations that fed into that, the currency at that point, the market multiples, et cetera, and that is a point in time 12 months ago.

As you said, over the last 12 months, Creditas has been performing. Arguably, it has been performing according to plan, but it has been performing exceptionally well.

The flip side of that is that the comps, and many of the comps have actually gone the other way, where multiples have actually fallen over the last 12 months for many of those fintech names. Then you move to the fact that in this Brazilian election cycle, if we had valued Creditas just before quarter end in Q3 versus 2 days later, there would have been a 25% swing.

We did a simulation math on it, which is, I hate that volatility in something like Creditas, which is the biggest name in our portfolio. All in, we are not there yet in terms of our valuation, it will either be Q4 or Q1.

The underlying performance of the company is a tailwind for any valuation we come out with. Over the last 12 months, the multiples have been a headwind, and with the currency somewhere in between.

That is kind of where we are at without giving any forward guidance, if that is okay.

Yeah. No, that's helpful.

On Juspay, I recognize a lot of this, the value from these UPI fees could likely end up with the banks. Could you say anything about what kind of share, if any, would be feasible for Juspay to take in that environment?

Yeah. What I'll do is I will let Alexis speak on this because he's on the board and in the details, and we're just trying to be very cautious on something that's very top-down positive with still not a lot of micro-level detail.

Alexis, why don't you take the mic?

Yeah. Just to provide a bit of context.

For the longest time, UPI MDR has been mandated to 0, and finally, the regulator has allowed pricing and 40 basis points on larger UPI transactions. That provides a $2 billion a year revenue pool that will go to predominantly, as you mentioned, the banks on the issuing and acquiring side, and also the UPI apps.

There isn't necessarily a direct benefit to Juspay. They operate predominantly as a technology service provider for most of these assistants.

Historically, the payment infrastructure has had to be subsidized and funded from other profit pools of these entities. Now there's a very significant revenue pool that will help fund some of the infrastructure projects that Juspay provides and carries out for some of these users.

I think our expectation is that once this gets implemented the pricing power of Juspay improves pretty materially. It's hard for us to say with certainty what the direct impact might be anytime soon.

I think the other thing to note is that initially it was planned to be implemented from the October 15th, and on the October 13th, it was decided that it would be delayed and rolled out post-Diwali. We still don't have a specific date in which this will be rolled out.

I think the expectation is somewhere between Diwali, which is the November, and the beginning of the calendar year 2027, January 1st. That's another kind of moving piece here that's hard for us to forecast.

Okay. That's super helpful.

Yeah. Net very positive and tailwind for the company is just hard to say with certainty right now.

Understood. Finally on Konfío, 2 quarters in a row with clear valuation headwinds, and you mentioned reigniting growth here.

Could you perhaps provide some more context on what's changing there at the moment?

Yeah. I think the valuation headwinds have been a function of multiples and FX as opposed to anything fundamental in the business.

What I would say from a fundamental in the business, year-to-date for the first half, Konfío is running behind our forecasts. Pointing to a stronger second half, really with AI implementation, capital in place on the funding side, and looking to put a foot down on growth.

So we were glass half empty in the first half, but then it flipped in Q3 to glass half full, and they've really delivered on the growth profile of what they were pointed for the full year. Not to get carried away, but basically they're starting to put a foot down on growth, kind of like what we saw Creditas do 3, 4 quarters ago.

We are seeing it through both the working capital book and the credit card book. It has been a very strong quarter.

Given the indications from management, that should roll into Q4 as well. We are back in growth mode, and that means Konfío in the 30%-40% growth mode is maybe 25%-40%, similar to Creditas and Juspay, where it was lagging in the first half of this year.

Hopefully I can give you a bit more context in Q4.

Excellent. Thank you very much.

Yeah. Sorry, just to wrap up on that line, it is kind of like on a portfolio level, you are just kind of hearing all these tailwinds in Creditas, Juspay, Konfío, Abhi.

It is quite nice for us as portfolio managers to have these things to share. It is a good time.

Afternoon, Dave and Alexis, and congrats on the underlying improvements. First up, the Brazilian election.

Does it change your view on new investments in the country going forward if we have a Bolsonaro that ultimately wins next week?

Yeah, I am in New York this week meeting investors, and there is a lot of people getting carried away with the impact of Bolsonaro on Brazil. We are trying to be level-headed while cautiously optimistic given everything we have seen in emerging markets over time.

The fiscal focus of a Bolsonaro right-leaning government around government debt rates will be very market friendly and will be very fintech friendly in terms of growth margins, asset quality, especially for the lenders in that market. So yes, it would.

If it is cemented this weekend, it would make us net more positive on Brazil, even though we have been in Brazil for 10 years through the governments of right and left, and there is a lot of fundamental positives. I think first and foremost, you have to look at it through the prism of the fact that we are very long Brazil, and we benefit on that front.

Yes, it would make us more positive, and it would make international capital more positive, which would be good for both capital into the country and in theory, capital out in terms of IPOs and M&A.

Very good. The other thing, you were really clear about the buybacks priority going forward.

One thing that is missing from that piece now, obviously, is liquidity. So can you say anything about how you think about potential exits, where you would like to focus on?

How do you view it from a strategic point of view?

Yeah, no, it's fair. It's not much of a buyback without cash, is it?

But where we're at is, I think what we've been trying to do with the markets over time is just drop breadcrumbs, let them know where our mindset is, where we're going to next, where the direction of travel is. We did it with exits, then we did it with debt, and now we're doing it with buybacks.

Nothing's real until we have the exit and the cash on balance sheet to do them. So hence we're not coming out with anything too deep and formal.

It's just a high level ideology and direction of travel, which I think the market understands and likes. Regarding exits, I hate to pick timing of exits in our world because they're so volatile and so unforecastable, even if you are confident on different ones and when.

What I'd just say is we're confident over the next 12-18 months we will see more, a continuation of exits. But we'll hold back on anything a bit deeper on capital allocation until then, if that's okay.

Yeah, sure, no problem. Lastly from me, really good case study on Georgia Capital there.

I think it quite resembles Kinnevik back in the days when it used to own a large chunk of Tele2 for cash flows. In your situation, do you see that, for example, Creditas can become that holding for you in the future that can provide cash for you as a second liquidity lever?

Yeah. No, for sure.

I think there's many possible futures clearly for VEF, and one of them is one where Creditas does IPO. We exit some of the IPO, but we've got a large listed asset in the portfolio that's near liquidity, probably pays dividends, and is an anchor from a valuation perspective because it's got a public market price.

We had that when we began with Tinkoff Bank. It was a great experience, albeit we were very happy to sell it when we did and make a great return for investors.

But that's whether we go there organically through the IPOs of Creditas, Konfío, Juspay, for example, or whether we go there inorganically in time by the acquisition potentially of something listed. That's beyond the short term strategy.

You can see how a listed company in the investment company's portfolio, like what you said in Kinnevik in its glory days with Tele2, is a great example of what we could do.

Good. Very clear.

Thanks for the presentation today.

Super. Thanks, Stefan.

Yeah, just a quick one to say thank you very much for following us. As always, your participation, your patience.

I believe we are doing the right things to have a better future for all our shareholders. Watch this space, stay close to us.

Any questions, feel free to come back to us directly and we look forward to seeing you next quarter. All the best.

Thank you.