Kinnevik Results Presentation Deck
Intro
Net Asset Value
Note 4 Financial Assets Accounted at
Fair Value Through Profit & Loss
OUR FRAMEWORK AND PRINCIPLES
In assessing the fair value of our unlisted investments, we apply IFRS
13 and the International Private Equity and Venture Capital Valuation
Guidelines, whereunder we make a collective assessment to establish
the valuation methods and points of reference that are suitable and rel-
evant in determining the fair value of each of our unlisted investments.
Valuations in recent transactions are not applied as a valuation method,
but typically provides important points of reference for our valuations.
When applicable, consideration is taken to preferential rights such as
liquidation preferences to proceeds in a sale or listing of a business.
Valuation methods include revenue, GMV, and profit multiples, with
consideration to differences in size, growth, profitability and cost of equity
capital. We also consider the strength of a company's financial position,
cash runway, and the funding environment.
The valuation process is led independently from the investment team.
Accuracy and reliability of financial information is ensured through con-
tinuous contacts with investee management teams and regular reviews
of their financial and operational reporting. Information and opinions on
applicable valuation methods are obtained periodically from investment
managers and well-renowned investment banks and audit firms. The val-
uations are approved by Kinnevik's CFO and CEO after which a proposal
is presented and discussed with the Audit & Sustainability Committee and
Kinnevik's external auditors. After their scrutiny and potential adjustments,
the valuations are approved by the Audit & Sustainability Committee and
included in Kinnevik's financial reports.
When establishing the fair value of other financial instruments, meth-
ods assumed to provide the best estimation of fair value are used. For
assets and liabilities maturing within one year, a nominal value adjusted
for interest payments and premiums is assumed to provide a good
approximation of fair value.
Information in this note is provided per class of financial instruments
that are valued at fair value in the balance sheet, distributed in the levels
stated below:
KINNEVIK
Interim Report Q2 2022
Portfolio Overview
Category
• Value-Based Care
• Virtual Care
• Platforms & Marketplaces
• Software
• Consumer Finance
Sustainability
2021
Kinnevik Unlisted Investee Averages
Revenue Growth
+105-125%
+215-235%
+40-60% / +140-160%
+130-150%
+30-50%
Note: Kinnevik unlisted investee averages are weighted by fair value.
2021
Gross Margin
5-15%
35-55%
30-40% / 60-80%
60-80%
50-70%
Financial Statements
NTM
EV/Revenue
Level 1: Fair value established based on listed prices in an active
market for the same instrument.
Level 2: Fair value established based on valuation techniques with
observable market data, either directly (as a price) or indirectly (derived
from a price) and not included in Level 1.
Level 3: Fair value established using valuation techniques, with sig-
nificant input from data that is not observable in the market.
For companies that are valued based on multiples, an increase in
the multiple by 10% would have increased the assessed fair value by
SEK 2,016m. Similarly, a decrease in the multiple by 10% would have
decreased the assessed fair value by SEK 2,025m.
A NEW VALUATION ENVIRONMENT
In the second quarter of 2022, the downward valuation pressures faced by
public growth assets during the first quarter continued without abatement.
Concurrently, many companies also faced sidewinds from speculation
around post-pandemic consumer behaviour, as evident in the stock
market's valuations of companies in sectors such as non-specialized
virtual health, e-commerce, and streaming services. Changing expecta-
tions of inflation and interest rates continue to be a significant driver of
valuation multiples, in particular for companies such as ours where cash
flow profitability is typically still some years out. Going forward, another
external force driving changes in valuations may be to what extent the
3.0-4.5x
1.5-2.5x/5.0-7.0x
8.0-12.0x
10.0-25.0x
5.0-7.0x
2021
Revenue Growth
+55%
+80%
+40% / 45%
+35%
+40%
Other
Peer Group Averages
2021
Gross Margin
25%
45%
40% / 80%
80%
55%
NTM
EV/Revenue
2.0x
1.5x
1.0x / 4.0x
5.0x
5.5x
business cycle contracts and the economic activity in our key markets
decline, affecting demand for our companies' products and services.
Investment activity in private venture and growth markets has slowed
down relative to the hectic 2021, and the IPO market has effectively closed.
This is leading to fewer transactions and less price discovery occurring in
private markets during the first half of 2022 that could otherwise aid the
calibration of our valuation models. Even so, we see clear signs of private
markets reconciling with the material derating in public markets and that
this correction is bearing a more significant impact on later-stage com-
panies relative to earlier-stage companies. Still, companies regarded as
leading businesses in their respective sector or business area are typically
facing fewer and less intense challenges when raising capital relative to the
median business, and this differential has widened during the first half of
2022. These parameters, paired together with our companies' operational
performance, financial strength and reliance on the near-term funding
climate, have been taken into consideration when valuing our unlisted
companies. Growth remains a distinct influence on valuation multiples
in public markets, and we seek to reflect a corresponding differential
when valuing our companies in relation to slower-growing public peers.
MULTIPLE CONTRACTION
We continue to seek to reflect the quarter-end valuation levels of publicly
listed peers when valuing our unlisted businesses, typically allowing
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