Creditas, which is VEF’s largest portfolio holding at 52% of NAV (latest reported numbers), posted its strongest quarter to date, with new loan origination reaching a record of BRL 1,024m, up 9% q-o-q and 227% y-o-y. The portfolio under management came in at BRL 3,717m, and was up 198% y-o-y. Since Q4’17, the portfolio has grown by a CAGR of 150%. Revenue as a percentage of the average portfolio under management came in at 39% in Q4’21, up from 36% in Q4’20. This means that revenue has grown even faster than the portfolio under management in Q4’21, as it grew by 209% y-o-y.
VEF has grown NAVPS +33% p.a. since inception
Since the key focus for Creditas is to continue growing and taking market share, its net income remains negative. However, when the company scaled back its growth ambitions during the pandemic in Q2’20, cash flow turned positive, which to us demonstrates the strength of the business model. We believe this is important from the investor community’s point of view, especially since Creditas is preparing for an IPO in 2022/2023. The company is already one of LatAm’s leading private fintech players. If all goes to plan and it becomes a listed company, we believe this would be a strong positive NAV catalyst for VEF. Since its listing, VEF has built up an impressive track record, where it has been able to grow its NAV per share by a CAGR of 33%.
Trading 26% below the low end of our fair value range
We view VEF as an intriguing opportunity to tap into the private fintech market, giving investors exposure to highly populated and scalable markets such as Brazil, India, Mexico and Pakistan – regions that have the largest structural growth opportunities. The stock has taken a tumble over the last couple of weeks in this volatile market environment. We asses that VE
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