VEF: Undiscovered sweet spot - DNB

Q1 portfolio highlights. 1) VEF’s NAV rose by 4% QOQ in Q1 in USD, as the operating performance of its attractive fintech portfolio more than offset 10%+ FX headwinds and 15–20% peer multiples compression; 2) we expect its Latin American lending portfolio anchors Konfio and Creditas to report 100–200% revenue growth in 2021, while noting strong operating momentum for Indian payment platform Juspay, and would not rule out VEF making the most of this funding window to raise capital, which we believe would act as value catalysts in 2021; 3) Creditas has said it remains on course for a potential IPO in 2022; and 4) with USD44m in net cash, VEF has said it expects to commit ~USD20m to follow-on investments in its current portfolio, and with a lot of capital-chasing assets in the emerging market fintech ecosystem, we would not rule out a portfolio exit in 2021 (CEO Dave Nangle said up to five of its holdings are in some form of discussions with potential acquirors, while its new investment pipeline is also heating up).