VEF : 2020 Annual report

Annual Report 2020

The emerging market fintech investor

Table of contents

2020 in brief	7
VEF - The emerging market fintech investor	8
Managing director's letter	12
The Indian fintech opportunity	16
Interview with Vimal Kumar, founder and CEO,
and Sheetal Lalwani, COO, of Juspay	20
Interview with Sumit Maniyar, founder and CEO of Rupeek	24
Fintech driving financial inclusion - VEF's sustainability footprint	30
Investment portfolio	36
Latin America	38
Creditas	38
Konfío	39
Nibo	40
FinanZero	41
Magnetis	42
Xerpa	43
Guiabolso	44
Emerging Europe and Africa	45
TransferGo	45
REVO	46
JUMO	47
South Asia	48
Juspay	48
Finja	49

The VEF share	50
Financial summary	52
Corporate governance	54
Sustainability report	62
Administrative report	66
Group financial statements	68
Alternative performance measures	72
Parent company financial statements	73
Notes to the financial statements	77
Declaration	95
Independent auditor's report	96
Glossary	98
Financial calendar	99
Contact information	99

Annual Report 2020

5

388.1	3.83	23%	37%
Net asset value	Net asset value	Net asset value per share	VEF share price
(USD mln)	per share (SEK)	growth YoY (USD)	growth YoY (SEK)

Barra da Tijuca, Brazil (Photo: unsplash.com)

2020 in brief

By year-end NAV per share rose by 23% to a fresh all-time high of USD 0.47 and NAV of USD 388.1 mln, driven by continued strong performance across the portfolio. In SEK terms, NAV per share grew 8% to SEK 3.83.

The VEF share price increased by 37% during the year.

VEF's north star investment, Creditas, closed a Series E funding round of USD 255 mln, valuing the company at USD

1.75 bln. VEF invested an additional USD 25 mln as part of the round and Creditas now accounts for 44% of total NAV.

VEF added one new asset to the portfolio in 2020, and the first in India, and the company Juspay, one of the country's leading mobile payments companies.

Follow-on investments of a total of USD 4 mln were made in existing portfolio companies TransferGo (2 mln), Nibo (1 mln) and Finja (1 mln).

VEF raised SEK 522 mln (USD 61 mln) of fresh capital in November via a directed share issue, with the support of existing and new investors to continue the investment mandate in emerging market fintech.

At the Special General Meeting (SGM) in October,

Vostok Emerging Finance resolved to change the

Company's name to VEF.

Pipeline is the most exciting it has ever been, and we expect to convert new investments in the near future.

Annual Report 2020

7

VEF - The emerging market fintech investor

VEF's portfolio

Russia

VEF - investors in one of the strongest secular growth trends across some of the world's fastest growing markets.

VEF is an investment company listed on Nasdaq First North Growth Market in Sweden. We invest in growth stage private fintech companies across the emerging world. We take minority stakes and are active investors with board representation in each of our portfolio holdings.

We are emerging market and fintech dedicated and experienced capital. We are long-term investors and look to back entrepreneurs, and their team, through to exit. Our purpose is to create long-term sustainable value for our shareholders by investing in the future of finance across the emerging world.

Our history

VEF was founded in 2015 as a spin-off from VNV Glob- al, with one portfolio company, TCS Group Holding PLC (Tinkoff Bank) and a vision of becoming the leading fintech investor in the emerging world. Since inception VEF has grown rapidly and has at the release of this annual report made investments in 16 companies, diversified by geog- raphy, business type and stage of development, all with standout fintech opportunities in their respective markets.

Exits

Since inception, VEF has executed two successful exits from Russia's Tinkoff Bank and Turkey's iyzico

• Tinkoff bank at6.1x CoCreturn and 65% IRR
• iyzico at3.2x CoCreturn and 57% IRR

Emerging

Europe

Mexico

Brazil

India

Pakistan

Africa

NAV/share & share price development

VEF NAV evolution (USDm)

Geographic distribution

Portfolio composition

	NAV/share (SEK)		Share price (SEK)		Net proceeds from capital raise

Russia 3%	Pakistan 2%

4.00

400

Africa 3%

3.20

350

India 5%

300

Emerging

2.40

250

Europe 9%

200

1.60

150

0.80

100

50

Mexico 15%

0.00

16-Mar

16-Sep

16-Dec

17-Mar

17-Sep

17-Dec

18-Mar

18-Sep

18-Dec

19-Mar

19-Sep

19-Dec

20-Mar

20-Jun

20-Sep

00

15-Dec

16-Mar

16-Sep

16-Dec

17-Mar

17-Sep

17-Dec

18-Mar

18-Sep

18-Dec

19-Mar

19-Sep

19-Dec

20-Mar

20-Jun

20-Sep

20-Dec

15-Dec

16-Jun

17-Jun

18-Jun

19-Jun

20-Dec

16-Jun

17-Jun

18-Jun

19-Jun

Brazil 63%

Cash and liquidity
investments 14%
1%	44%

1%

2%

2%

2% 3%

3%

3%

4%

7%

13%

8

Introduction

Annual Report 2020

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Our strategic pillars

Our strategic pillars are the prism through which we think about everything we do, what drives our strategy and makes us successful as an investment company.

Invest well and thrive

We are our investments. They define us. We are only a thesis and a bunch of human and financial capital without them. We spend a lot of our time making sure the right assets and entrepreneurs populate our portfolio and when they are in, we do everything in our power to help them succeed.

Love your investors

Our investors provide the capital we need to fuel our business. Simply put, without them we would not exist and our growth path from here would be all the harder. We love our investors, current, old and potential, and pride ourselves on doing our utmost to provide them with a healthy return on capital and good communication flow and transparency while on that journey.

Build a business for the long term

While our first two pillars are necessary for any success, we are building VEF, the investment company, for the long term. Our goals are big, our timeline is long, we are consistently evolving and improving all to make sure VEF is a business that has the right people, processes, and strategy to grow over time.

Our investment thesis

We believe in investing in businesses led by entrepreneurs with strong track records and in companies with clear product-market fit, early traction into a scale opportunity space. For us, fintech is a very broad concept and covers anything from payments, credit, mobile money, remittance services, accounting SaaS, and beyond. There is no single business model that dominates our portfolio or our investment thesis. Our key investment criteria include excellent people, scale business models, strong unit economics and a clear path to profitability.

Sector

We target all lines of financial services inclusive of payments, credit, savings and investments. The "right" target sector is very market-dependent.

Geography

Within emerging markets, we focus on the more populous and scalable markets, referenced against competition for opportunities and point in the cycle.

Minority stakes and board seat

VEF targets sizeable minority stakes of 10-20% with board representation in its portfolio companies. We are active and supportive shareholders.

Unique fintech opportunity

There are very few ways to play the growing fintech investment theme in public markets and even less in the emerging world. VEF is a unique access asset in this regard.

Shareholder value creation

We believe in the potential for extensive shareholder value creation and an exceptional investment opportunity and high returns based on the combination of:

• leveraging the disruption of fintech companies
• attractive market conditions in the emerging world
• active and supportive ownership
• entrepreneurs with strong track records
• scalable, fast growing companies, with a clear path to profitability

10

Introduction

Annual Report 2020

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