Fram Skandinavien : Kvartalsrapport Q2 2023

Fram Skandinavien AB (publ) 556760-2692

Interim Report

2023 Q2

General information

Ticker	FRAM B	Sector	Investments focused on publicly listed and private tech companies, as well as digital assets
Market	Nasdaq First North Stockholm	Geography	Southeast Asia
Activity	Investment company	Investment	9 people based in Vietnam, including:
		organization	- Hanh Mai, CEO
Date of IPO	October 2017 at 20 SEK per share		- Son Ngo, Group Finance Director
	- Christopher B. Beselin, Chairman

Key highlights, Q2 2023

Fram Skandinavien's strategic focus on driving profitability and cultivating a robust venture pipeline

• As of 31st of July 2023, the net asset value amounted to 303 mSEK (84 SEK per share), which was approximately +180% above the closing price of the Fram B share on the same day and represented a increase of +13% compared to 30th April 2023.
• Following the implementation of its new investment strategy, Fram has actively pursued initiatives to enhance profitability, improve capital efficiency, and strengthen investment readiness for the ventures within its portfolio. This strategic shift has allowed Fram to focus on driving growth and maximizing returns for its investments, ensuring that it remains well-prepared to seize investment opportunities and achieve long-term success.
• During Q2 and July 2023, additional fundings were made by Fram into Carmudi and EveHR for respectively 3.5 mSEK and 0.6 mSEK to support their business operations and to prepare their development for further value appreciation.
• Fram received an earn-out payment from the divestiture of its IT development business at the amount of 4.2 mSEK in June. In early July, Fram sold its shares in Grab and earned a gain of +23% on the invested value (sold at 1.4m SEK against cost of 1.2m SEK).
• The current portfolio of Fram consists of 7 holdings, including 4 private and 3 public tech companies, with a total invested amount of 52 mSEK. The total NAV of these companies reached 270 mSEK, rendering a latent return multiple of 5.2x on the invested capital.
• The Fram team has continuously screened and done extensive research / due diligence on tech startups in Vietnam and the Southeast Asia ("SEA") region in order to form a strong pipeline for future investments.

Tech sectors lead the equity market rebound

• Positive growth in the equity market in H1 2023: The equity market in H1 2023 has shown significant growth, particularly with the rebound of tech companies amidst ongoing challenges. Tech stocks, in form of Nasdaq 100, have performed exceptionally well, experiencing a rebound of approximately 37%. This growth has been driven by investors' increasing focus on artificial intelligence (AI) and its real-worldapplications, as well as advancements in long-hypedtechnologies.
• Monetary policy to support the economy: The SEA region has experienced slower-than-expectedinflation, allowing central banks to refrain from tightening policies and instead focus on bolstering domestic consumption by accommodating monetary policies. For instance, the Vietnam central bank has cut interest rates by 50 basis points in the face of weak global demand and slower credit growth.
• Increase in IPO activity in Southeast Asia: IPO activity in Southeast Asia has slightly increased by approximately +16% YoY in terms of deal value. Although the startup funding environment in the region has slowed down, IPO activity has shone with 85 deals and proceeds amounting to 3.3 bnUSD.
• Vietnam ranks second in startup funding: The region as a whole secured 403 deals with a total of 4.2 bnUSD in proceeds, experiencing a decline of -56%YoY. Singapore remains the most active market, but Vietnam has outranked Indonesia in deal value in Q2 2023, demonstrating a deal volume resurgence.
• Potential sectors in a post-pandemic world: The sectors of AI, energy transition, health tech, and deep tech are expected to have significant potential in a post-pandemicworld. The regional tech news site, Tech in Asia, states that spending on AI has increased by +76% YoY.

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Table of content

1. Market overview
2. Significant events during Q2 2023
3. Investment review
4. Portfolio
5. Group consolidation
6. Financial statements
7. Further information

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1. Market overview

Tech sector resurgence in an uncertain market

• Positive growth in equity market in H1 2023: The equity market has experienced positive growth in the first half of 2023, particularly in the stock market. Despite facing critical challenges such as persisting inflation, the US debt ceiling difficulty, the collapse of major banks, and ongoing US-Chinapolitical tensions, the tech sector has rebounded significantly. The Nasdaq 100, representing tech stocks, has seen a remarkable +37% increase in H1 2023. This growth can be attributed to investors' increasing focus on AI and its applications.
• Monetary policy support for the economy: many central banks in Southeast Asia have opted to maintain an accommodative monetary policy. This decision comes as the region's growth rate is expected to be 4.6% this year, slightly lower than the Asian Development Bank's previous projection of 5%. The central bank of Vietnam has cut interest rates by 50 basis points to stimulate growth.
• Highest returns after market downturns: Market downturns should not be seen as solely negative events. They also offer a silver lining for investors who are willing to embrace uncertainty and seize opportunities. By studying historical examples, such as the dotcom bubble burst and the 2008 financial crisis, we can learn that investing during uncertain times can lead to significant returns. Similarly, companies founded during these periods have delivered the highest returns for investors. The best time to invest is indeed when uncertainty is present, but it must be done wisely and with a long-termperspective in mind.
• Promising sectors in a post-pandemic world: certain sectors are expected to thrive, including AI, energy transition, health tech, and deep tech. The adoption of AI technology in Southeast Asia has seen a significant surge, increasing from 39% in 2020 and 2021 to 76% in 2022. The banking, financial services, and insurance (BFSI) sector, along with the manufacturing industry, are the top spenders, accounting for 27% and 17% of AI spending by vertical, respectively. These sectors hold great potential for growth and innovation in the coming years.

InvestmentSignificantpanoramaevents during Q3 2022

• Southeast Asia's IPO market experienced an increase of around +16% YoY in terms

•of dealx value, bucking the global trend of a decline in the number of listings and the amounts raised. In H1 2023, there were 85 IPOs in Southeast Asia, raising a total of 3.3 bnUSD in IPO proceeds, compared to 73 IPOs and 3.1 bnUSD in the same period last year.

• On the other hand, VC fundraising activities in Southeast Asia witnessed a decline, with only 11 funds closed during the period, raising a total of 3.7 bnUSD. This is less than half the amount raised during H1 2022. Singapore, the traditionally most active market, experienced a slowdown in fundraisings, with only 5 funds reaching a final close, compared to 8 during H2 2022. Limited partners are also more inclined to focus on established relationships rather than taking risks on new ones in the current environment
• Vietnam surpassed Indonesia for the first time to become the second-largest recipient of VC funding in Southeast Asia during Q2 2023. Despite a decline of -56%YoY in total proceeds, Southeast Asian startups secured 403 deals with 4.2 bnUSD. The median value of seed rounds also declined, indicating that early-stagefunding is far from immune to the ongoing global liquidity crunch. Singapore remained the most active market, but Vietnam experienced a notable resurgence in deal volumes, outranking Indonesia in Q2 2023 in terms of deal value.
• There are over 50 unicorns in Southeast Asia. Among them, the Temasek-backed Indonesian aquatech startup eFishery was the only Southeast Asian company to achieve unicorn status during the period, compared to two unicorns formed in H2 2022.

Source: Dealstreet Asia, Business Times, Deccanherald

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2. Significant events during Q2 2023

Q1:

January - March

6th March

Fram^ appointed Keshav Rustagi, new Co-MD for Carmudi to drive the new direction for the company

During March

EveHR won new customers (Bosch and Amanotes) and continued to expand

Q2:

April - June

11th April

Fram^ released notice to Annual General Meeting 2023 and proposed share scheme to key managements at Fram Skata AB (Carmudi), and Fram Venture 9 AB (EveHR)

31st May

Duy Vu stepped down as Co-MD at Carmudi and continues in his new role as Senior Advisor.

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