Kinnevik AB

STO:KINV B

Earnings Call Transcript 2021-Q4

[Georgi Ganev, Chief Executive Officer]

Good morning, everyone, and welcome to the presentation of Kinnevik's results for the fourth quarter and full year 2021. I am Georgi Ganev, Kinnevik's CEO, and with me today is our CFO, Erika Söderberg Johnson. And for the Q&A part of this call, we're also joined by our Director of Corporate Communications, Torun Litzén, and Samuel Sjöström, who recently was appointed Chief Strategy Officer. Let's move to Page 2. As we are putting 2021 behind us, we can look back at a year where we fundamentally shifted our portfolio towards younger, private growth companies. We distributed Zalando, saw returns in our private companies of nearly 80% and actively reallocated capital within our portfolio. We expanded our portfolio to add some of the world's most innovative growth-stage technology businesses like Spring Health, Sure and Jobandtalent. Our current investments continue to flourish, achieving incredible milestones. We've done this while remaining true to our values, working to build a more diversified and sustainable future. As a result of this, we ended the year with a more balanced set of growth companies, a portfolio with half of its capital invested in private businesses and a stronger financial position than what we started the year with. This provides a solid platform for us to continue Kinnevik's journey as the leading listed growth investor and to continue to create long-term value for our shareholders. As for the agenda for today's call, we will begin with the strategic highlights of the quarter and then move on to look more at the strong development in Pleo, which showcases how we support the winners of our portfolio over time. Then we will talk a little bit more about 2 of our new portfolio companies, one from Q4 and one from January 2022. After this, we will go through our financial position and give you an indication of what our expected investments for 2022. So let's move on to Page 3, where we have summarized the key strategic highlights during the fourth quarter. At the end of 2021, our net asset value amounted to SEK 72.4 billion or SEK 260 per share. That's up by SEK 10.1 billion or 16% and compared to 1 year ago, adjusted for the distribution of Zalando, and down SEK 3.5 billion or 5% during the fourth quarter. In the public portfolio, weak share price developments in Global Fashion Group and Teladoc had a negative impact on NAV, especially in the second half of the year, while we saw the value of our private companies increase by SEK 17.5 billion in 2021 from net revaluations and net investment. Erika will take you through the development of our NAV in more detail as well as the valuations of our unlisted companies in a few minutes. Pleo's latest funding round was a highlight of the fourth quarter, and I will soon get back to that in more detail. During 2021, we added 10 new companies to our portfolio. Three of these came in, in Q4, namely Jobandtalent, our world-leading digital temp staffing agency; Vay, a tech-enabled mobility company; and Nick's, a global food tech innovator. Capital reallocation activity was high throughout 2021 and remained so also in the fourth quarter when we released SEK 5.3 billion from partial divestments of our VillageMD and Teladoc investments at returns exceeding 7x and 5x, respectively. In December, Mathem agreed to merge with Mat.se, Axfood's online grocery business, and to enter into a long-term strategic supply agreement with Axfood's purchasing and logistics company, Dagab. Kinnevik will own 31% of Mathem after the transaction and remains the company's largest owner. The combination of Mathem and Mat.se, together with the partnership with Axfood, will create synergies, increase scale and enable the combined company to further improve its customer proposition in the direct-to-home online grocery market. During the quarter, we invested $25 million in TravelPerk's latest funding round. We have been truly impressed with how TravelPerk has used the COVID crisis to further build its best-in-class product and win new clients. As a result, the company's performance far exceeded prepandemic levels as travel began to gradually normalize in 2021 and clients sought solutions to manage travel complexity. In November, we published our first Sustainability-Linked Financing Framework, followed by the issuance of our inaugural sustainability-linked bond of a total of SEK 2 billion. Establishing a Sustainability-Linked Financing Framework and thereby linking our ambition to be a sustainability leader into our financing solutions is a natural step for Kinnevik. Recently, we were very proud to be acknowledged as the best practice leader in the Gender Equality Index Report By European Women on Boards, a nonprofit organization aiming to promote gender equality in corporate leadership. But while we are proud, we are far from satisfied. We remain committed to driving the Diversity & Inclusion agenda and have, during 2021, worked to identify new D&I targets to address the broader approach to diversity and the importance of inclusions of all to raise the bar further. Therefore, we now announced an updated and more ambitious set of D&I targets, which, going forward, will replace the targets announced in 2019. These include our previous no follow-on policy and 10% female capital allocation targets and the measuring period of which has been updated in line with our sustainability-linked financing. We also include a new inclusion-focused target for our own team and a target to drive incremental progress across the portfolio on relevant D&I efforts. And all targets will be reported on annually. Let's now go back to Pleo on Page 4. We have a strong track record of working closely with successful challenger companies over the long term and supporting them to become industry winners. And our relationship with Pleo is a great example of this. We first invested in Pleo 4 years ago as part of our Nordic venture strategy. We led the company Series A but have participated at or above pro rata in their Series B and C and continue to do so now in their last round, led by Coatue and Alkeon, where we invested another $25 million. It was apparent from the outset that the pair of founders, Jeppe and Nicco (sic) [ Niccolo ], were a great complement of strategy, product, experience and execution. They were also focused on building something truly large, a sustainable company based on a new way of looking at an old industry. Fast forward to today and Pleo now works with more than 20,000 businesses and processes their employees' aggregate annualized spend of over $1 billion with world-class customer satisfaction score. The funds from this round will be used to extend Pleo's product offering beyond expense management towards a holistic suite of financial tools. The funding round valued Pleo at $4.5 billion pre-money, around 180% higher than the valuation reflected in our Q3 report. This corresponds to a return on our first investments in 2018 of nearly 55x and more than 10x our aggregate investments since then. We are proud to continue to support a company we believe is emerging as the category winner in its field, helping both growing and established businesses manage their corporate spending in a modern, simplified and efficient way. On Page 5, we will now look at a new addition to the portfolio in Q4. On the 1st of December, we announced the biggest single ticket for a new investment that we have made to date, $115 million into Jobandtalent, as we added the workforce-as-a-service platform, disrupting the modern labor market, to our portfolio. Digitization and globalization are forcing employers to adapt to new ways of working, and societal pressures are being placed on companies to embrace a larger share of responsibility for temporary workers. This opens up for new and innovative services in some of our focus sectors. Jobandtalent's goal is to make it easy for people to find regular, dependable work and have a security in perks typically associated with full-time employment, including pensions, sick and holiday pay and training courses. Workers can apply for and manage roles, submit paperwork, sign contracts and get paid entirely within the Jobandtalent app. The company is headquartered in Madrid and currently operates in 9 markets with more than 1,300 companies using the platform. Over 100,000 workers have used the Jobandtalent to find temporary roles the first time -- 9 months of 2021 alone. Within consumer services, we have, over the past couple of years, increasingly focused on managed marketplaces that help solve a highly fragmented supply of products and services and enable businesses that help alleviate pain points in consumer-facing businesses. The Jobandtalent opportunity sits at the intersection of these themes, and we have been super impressed with the ambition of the co-founders, Juan Urdiales and Felipe Navio, and their team. If we then turn to Page 6 to look at another company that we only recently added to the portfolio. Many of you are probably already familiar with the name Glen Tullman, who is the founder and former Executive Chairman and CEO of Livongo, one of Kinnevik's first health care investments. We think Glen is an exceptional founder. We're highly impressed by his ambition and capabilities during the Livongo days, and we were therefore pleased to announce in January that we have invested $60 million into Glen's latest venture, Transcarent, a new and different health and care experience company for employees of self-insured employers and their families. Our investment and ambition to support Transcarent with more capital over the coming years comes on the back of having released some capital from a partial sell-down in our Teladoc investment during December. Health benefit costs for U.S. employers continue to rise at more than twice the rate of GDP growth over the last decade, and employers are urgently looking for innovative approaches to absorb the employee cost share and lower cost in general. Technology-enabled services can reduce an employer's health care cost, but the explosion of services offered has made it difficult for buyers to prioritize and assess specialized solutions. And to further add to the complexity, almost 70% of employees in the U.S. work for self-insured employers, meaning the employers work with health plans for administrative services and access to a network of doctors but ultimately pay for the cost of care themselves. And as you all know by now, at Kinnevik, we're big believers in value-based care. And our companies serve Medicare, Medicaid and fully insured commercial solutions and now, through Transcarent, also self-insured employers. So Transcarent is addressing these problems of spiraling cost and fragmentation of solutions by building a comprehensive, curated platform of care services for self-insured employers. Transcarent delivers a single, easy-to-understand digital interface, providing a personalized health and care experience for virtually all of the most common and most challenging needs. This includes everything from essential care such as primary and urgent care to specialty care. We led the $200 million funding round together with our previous Livongo co-investor, Human Capital, as well as a number of leading U.S. health systems. Transcarent fits squarely into our investment thesis and complements our health care portfolio ideally. The focus on consumer choice, the mission to align incentives between providers and health consumers and the ability to create a more equitable health care industry by providing everyone with the same high-quality experience no matter the members' background or position in a corporation is very appealing to us. That said, let's now move over to Page 7 for Erika to go through the details of valuation changes and NAV development.

[Erika Söderberg Johnson, Chief Financial Officer]

Thank you, Georgi. The fair value of our unlisted assets increased by almost SEK 3.2 billion or 11% in the quarter. Net revaluations of private companies amounted to SEK 4 billion. This was slightly offset by net divestments of SEK 0.7 billion as we released SEK 3.1 billion in VillageMD invested in total SEK 2.4 billion in the quarter. The value increase was driven by Pleo with some contribution from TravelPerk. These positive changes in our unlisted assets were offset by negative share price developments in Teladoc and Global Fashion Group while Tele2 was stable. With further capital released from Teladoc, we ended the quarter with total net divestments of SEK 2.9 billion, and the total value of our growth portfolio amounted to SEK 43.3 billion at the end of the quarter. And now let's focus on the key valuation assessments. On the back of the recent fundraise, our valuation of Pleo increased by 2x from last quarter, including our investment of SEK 227 million. This implies a fair value of our 14% stake of SEK 5.9 billion and means that the company is at a significant premium to its peers on a 2022 basis, which normalizes over time due to Pleo's expected higher growth. The increased valuation means that Pleo was the largest asset in our growth portfolio by end of December. Our holding in TravelPerk amounts to SEK 1.7 billion and is valued in line with the valuation in the company's funding round in December. Our valuation is corroborated by forward-looking revenue multiples of SaaS peers. With TravelPerk performing strongly, our valuation is in line with peers on a forward-looking basis. The fair value of Kinnevik's 4% shareholding in VillageMD amounts to SEK 4.7 billion and corresponds to the valuation in the transaction with Walgreens Boots Alliance announced in the fourth quarter. The valuation remains stable in spite of peers' multiples trading down by around 20% in the quarter due to the recency of the transaction but also reflective of the company's structural advantage and stronger growth trajectory stemming from the unique partnership with Walgreens Booth Alliance. Moving on to Cityblock, where we reflect the multiple contraction in the peer group by adjusting the company's equity value downwards by 10% compared to the valuation used in the funding round in the third quarter. This implies a fair value of our 8% stake of SEK 4 billion, including the SEK 223 million we invested in the quarter. Cityblock is still marked at a premium to the peer group of value-based care providers due to its materially higher growth rate. The fair value of Kinnevik's 37% holding in Mathem amounts to SEK 1.3 billion and corresponds to a decrease of 14% compared to the third quarter. On the back of the announced acquisition of Mat.se and the strategic wholesale agreement with Dagab, we have decreased the discount to the company's main peer, which partly offsets the multiple contraction of the peer group. Now let's turn to Page 8. Our net asset value amounted to SEK 72.4 billion at the end of December or SEK 260 per share. This is down by SEK 3.5 billion compared to the third quarter and represents a net asset value decrease of 4.6% in the quarter. Compared to 1 year ago, when adjusting for the Zalando distribution, this represents an increase for the full year of SEK 10.1 billion or 16%. The NASDAQ traded up 8%, and the OMXS30 traded up by 7%, while our total shareholder return was 4% in the quarter. With yesterday's closing prices of our listed assets, our net asset value was SEK 72.7 billion, so essentially flat this year so far. Now please turn to Page 10 for an update on our financial position and capital allocation framework. During the fourth quarter, we invested a total of SEK 2.4 billion, where SEK 900 million was deployed into our existing businesses. Our largest follow-on investments in the quarter were SEK 227 million into Pleo and SEK 226 million into TravelPerk. SEK 1.5 billion was deployed into 3 new companies: Jobandtalent, Vay and Nick's. For the full year 2021, we invested SEK 6.4 billion, SEK 4.4 billion in 10 new companies and SEK 2 billion into follow-on investments. In addition to proceeds from divestments and incoming dividends exceeding investments by SEK 0.9 billion, we issued SEK 2 billion in new sustainability-linked bonds to refinance the bonds maturing in March, ending the year with a robust financial position and SEK 4.5 billion in net cash, up from SEK 1.8 billion at the end of Q3. In summary, we ended 2021 with a more balanced portfolio with half of its capital invested in private businesses and a stronger balance sheet than what we started the year with. So we go into 2022 with a very strong financial position. And looking into 2022, we believe that as long as attractive opportunities arise, it is key to maintain our investment momentum. Therefore, in 2022, we expect to deploy around as much capital as we have averaged during the last 3 years. That is, in the region of SEK 5 billion. With our strong financial position and a proven track record of backing category-winning businesses, we feel confident that the Kinnevik team has the right tools, strategy and perspective on business building to continue to create long-term, sustainable shareholder value. And with that, I would like to hand back over to Georgi for some closing remarks on Page 10.

[Georgi Ganev, Chief Executive Officer]

Thank you, Erika. With investments of SEK 6.4 billion in 2021, we deployed more capital than we anticipated at the beginning of the year. And as outlined last quarter, our increased investment activity is a result of many attractive companies raising capital, our increased conversion of interesting opportunities into investments and our ability to maintain a strong financial position through capital reallocation. 2022 has started with expectations of rising interest rates and increasing risk aversion, putting pressure on the valuations of high-growth companies and widening the gap between public and private valuation levels. It is difficult to predict how the year will pan out and if what is unfolding in the public market's valuations of growth stock is a sign of a new environment. What is clear is that over time, as public market valuations eventually stabilize, the valuation gap between public and private markets is likely to narrow and find an equilibrium. From a long-term perspective, however, very little has changed. We continue to focus on secular growth, economic moats and sustainable unit economics and assume multiple contraction from our entry levels in all our investments. With an indefinite holding horizon, unrestricted investment strategy and long-term view on business building, we will experience a wide variety of markets throughout our 10 years as backers of our high-growth businesses. And keeping this in mind, as Erika said, we still believe that maintaining our investment momentum and actively reallocating capital as long as opportunities to back great founders and ideas arise is key not only to ensure our portfolio remains vibrant and dynamic but also to continue to deliver long-term, sustainable returns to our shareholders that shares our views on investing. We're now ready to answer your questions, so operator please open up for Q&A.

[Operator]

[Operator Instructions] Our first question is from Joachim Gunell of DNB Markets.

[Joachim Gunell, Junior Analyst]

So can you perhaps comment here, I mean, with regards to the financial muscle you currently have and the capital you want to deploy in the coming year where you see the best IRR, call it, opportunities here? We have seen you, call it, more prioritize the new, earlier-stage investments as opposed to, call it, commit to your existing portfolio. Is this something we can continue to expect?

[Georgi Ganev, Chief Executive Officer]

Thank you, Joachim, for your question. I think we had a very active year, added 10 new companies in the portfolio. It's not likely that we will do that every year. So we've said that a great part of our investment budget, if you will, we don't see that as a budget but rather a projection, will go to follow-ons in companies that we see great growth and, of course, great teams deliver on their forecasts. So I think it's difficult to say exactly how much will go into follow-ons and new investment this year, but 2021 was probably an extraordinary year in terms of new companies added to the portfolio. .

[Joachim Gunell, Junior Analyst]

Very clear. And given that the premium to NAV has narrowed slightly in recent months, can you, from a hypothetical point of view, elaborate if you would be comfortable to, call it, issue new shares at NAV or something similar now that investors obviously are getting increasingly comfortable that you are delivering on this new investment strategy, yes, basically in order to accelerate that approach? Do you have some other, call it, combinations under this?

[Georgi Ganev, Chief Executive Officer]

As we've said before, it's definitely a tool in the toolbox. And I think as long as we have the confidence in what we do and, more importantly, the trust from our shareholders, I think that's something we could do. However, having said that, looking at 2021, we were also able to reallocate capital within our growth portfolio. So more than 80% of the capital we invested came from companies within what we call the growth portfolio. So it's not that we have to raise capital just because we increased our investment pace. 2021 shows that, that was not the case. So we have the flexibility, we could do it, but we're not forced.

[Joachim Gunell, Junior Analyst]

Okay. And a question for Samuel or Erika. I mean can you just comment here? Since the unlisted or private investments now make up 60% of the NAV, how much of this is based on marked-to-model valuations? Or you'll turn to that, call it, in Q1, Q2 this year?

[Erika Söderberg Johnson, Chief Financial Officer]

Was a bit difficult to hear.

[Samuel Sjostrom, Chief Strategy Officer]

Sorry, Joachim. Was the question what proportion of our investments we mark to market?

[Joachim Gunell, Junior Analyst]

Exactly and that are not based on the recent, call it, transaction value.

[Samuel Sjostrom, Chief Strategy Officer]

I see. Well, I mean, your first -- it's sort of a false premise, right, because we value all our companies at market. The thing that is sort of a bit more tricky this time around is clearly the fact that while public and private markets obviously are correlated, the private market has not yet sort of caught up to where the public market is at today nor at the end of December. And you'll recall the March 2020 correction. Public stocks rebounded so fast that private markets barely had the time to react. So we value all our companies at fair value. And wherever the market is end of March will influence the valuations in our Q1. But Joachim, I'm not quite sure if that's the answer you're looking for, so maybe you can clarify.

[Joachim Gunell, Junior Analyst]

No, I think that clarifies it. So -- and yes, just a final one then for me. It seems that it takes some time for the public market to get comfortable with some of the earlier-stage, high-growth companies listed setting. We have seen this with Kinnevik today in Livongo and most recently Babylon. Are there any like learnings you draw from this? And does it impact the timing on when you think your future companies are IPO ready, you'd say?

[Georgi Ganev, Chief Executive Officer]

I think we don't have a lot of companies in the pipeline for listing, and that's the same thing for capital increases in our companies. If you are a high-quality company, you're probably well capitalized when you see some volatility in the market. That is the case for our companies, and that is the case for Kinnevik with a strong financial position. So I think it makes us more resilient both in terms of a portfolio perspective but also Kinnevik. Then of course, we have a few examples of companies that are trading -- I mean, we've seen weak trading. But I think those are for different reasons. If you look at SPAC transactions in general, they have been very volatile, almost no liquidity in that type of stock. So I think it's too much to kind of read into the trading of the Babylon share price, to be honest. If we go back to the kind of IPO of Livongo, it took some time for the market to understand what a great company it was. It was a health care investor that didn't really understand the kind of SaaS subscription model, if you will, consumer-facing products. And the kind of typical consumer investor did not, at that time, clearly understand the value that company provided for the health care plans and companies. So I think there are different reasons for sometimes a weak trading initially. Again, we are long-term holders of our companies, whether they are private and public. And when we decide to reallocate that we did in December where we sold shares in Teladoc, that was mainly because we saw a very interesting opportunity in Transcarent. So we are less kind of -- we speak less about the macro trends going forward and more how we can actually deploy the capital in the best possible way.

[Operator]

Our next question is from Eric Laliberte (sic) [ Derek Laliberte ] of ABG. .

[Derek Laliberte, Research Analyst]

Yes, I wanted to follow up on the valuations here. Clearly, they were impressively resilient given the exceptionally weak development in the peers, and you do give plenty of justification for this in -- for the presentation here with it being as of Q4 operational performance stage they're in and the position, et cetera. But, I mean, what would it take for you to feel obliged to downgrade your valuations more meaningfully in some of these cases? I mean Babylon is truly a unique business in the sector, but still the stock price is down 40% to 50%. And, I mean, I think you said earlier that VillageMD before the transaction was -- the valuation was increased from 2x to 11x times sales as Oak Street Health went public and advanced. So, I mean, I'm just trying to understand why we're not seeing a bigger impact on some of these names. And you talk about this private and public valuation dispersion, but I thought you -- all your valuations is based on the public market valuations. So if you can clarify that a bit more, it would be helpful.

[Samuel Sjostrom, Chief Strategy Officer]

Sure. Clearly, it's a million-dollar question as far as the NAV goes. An important distinction here is that we're valuing private companies, not public companies. We're valuing private companies by inferring data from public markets. But we're not necessarily valuing these private businesses as if they were listed. And the reason they're not listed is because they're not ready to be listed. So that's sort of the first distinction I'd like to make. You mentioned the issue of this gap. The gap is clearly broadening or widening as an effect of private markets lagging behind the public market that is changing in a very volatile way on a daily basis. So how -- I guess the question really is how do we deal with all of this. The way we try to approach this valuation gap is we make a couple of assumptions based on what we see, what we hear and what we believe in relation to the public markets' effects on the private markets we're operating in. And there's a couple of them. So firstly, it's likely that what's happening in public markets is going to impact the speed of processes and round sizes before it impacts valuations in the private market. Secondly, it's probably likely that some of these crossover guys that we've seen in the last 18 months may tilt in favor of public equity rather than private equity. We also believe it's likely to impact later-stage businesses before it impacts earlier-stage businesses. And as Georgi mentioned, you've seen how these guys have performed, and we've already seen a few pulled IPOs and some abandoned SPAC mergers just these last few weeks. I think the last and perhaps most important point is that we believe that it's likely to impact your "median" companies before it impacts the companies that are the leading category, winning or even defining ones. So those are basically the assumptions we make. And what happens then is that we're giving a few companies the benefit of the doubt provided that they have raised capital recently, they have strong balance sheets and long runways, so they're not in the need to tap the markets during these volatile times. They are typically growing faster than their public comps, they have gross margins that are in line with public comps and they are leaders in their sectors. So that's the dynamic that you should view as the context when considering the valuations of these star companies like Pleo, like TravelPerk, Budbee, Oda, HungryPanda, Cityblock, VillageMD, et cetera. I think what sort of goes in this perhaps in this quarter, and it's only natural, is that we are making a number of write-downs this quarter, but their impact on our NAV as a whole is pretty small. And that's sort of reasonable when you consider the fact that the companies with the largest weight in our portfolio are the ones that we've backed with the most capital and that have seen the greatest returns. So by nature, they're sort of inherently more stable and much, much larger investments. Does that sort of answer your question?

[Derek Laliberte, Research Analyst]

Yes. Sorry, I just want this one. That's a great clarification of -- but yes, I definitely understand, call that -- just a follow-up like on Village MD here. Hypothetically, I mean, obviously, we have this transaction just happening. But then the peers are down significantly here quarter-to-date. I mean if we assume these valuations were to be at the 31st of March, I mean, would that have any impact on VillageMD given that the transaction happened so recently? And how -- I think you mentioned in the report that, I mean, these transactions are just reference points, but -- where you do basically a multiple valuation in most cases. But, I mean, a transaction being that recent, I mean, could you still potentially decrease the value in that if valuations are 30% to 50% lower in Q1?

[Samuel Sjostrom, Chief Strategy Officer]

Most definitely. And I think that's what we're doing with Cityblock this quarter. We closed the secondary part of that transaction even in Q4, and we're taking that valuation down by 10%. The reason that we're not doing the same with VillageMD is pretty simple. I mean in both instances, we have very recent transactions. VillageMD's transaction with Walgreens is both larger and was agreed around 2 months later than the Cityblock transaction. The Walgreens-VMD partnership was also agreed at a lower valuation level than the transaction at Cityblock. And you -- I guess you've also noted that the valuation development at Village has been a bit more -- sorry, a bit less extreme than at Cityblock. So there's arguably a bit less short-term valuation risk baked in at VMD, which is why that valuation remains flat this quarter, whereas Cityblock is adjusted downwards. .

[Derek Laliberte, Research Analyst]

Okay. Great. That makes sense. And just finally, we talked about -- or you talked about the market climb potentially or is having an impact on the funding climb at the -- do you have a -- a lot of your holdings have recently done funding rounds, so everything looks -- most of the companies are probably in great shape. But could you highlight -- I mean, are there any ones there that are close to really leaving funding basically?

[Erika Söderberg Johnson, Chief Financial Officer]

Not really. But we are, as always, keeping sort of tight dialogues with our companies depending on what happens with sort of their markets and their strategies. This is an open dialogue we have. And that's one of the reasons that we want to be and remain well funded ourselves, so we can support if they need further funds in order to grow. But for the time being, as both Georgi and Samuel alluded to earlier, many of our companies have really well strong financial positions in order to not be forced to tap into the markets within the volatile times.

[Derek Laliberte, Research Analyst]

That's very clear. And that's all for me right now.

[Operator]

Our next question is from Oskar Lindstrom of Danske Bank.

[Oskar Lindstrom, Senior Analyst]

Three sets of questions from me, I'm afraid coming back a little bit to what we've talked about already quite a bit here. And the first one is on Pleo. I was just wondering. I mean, you mentioned the peer group here. Could you say maybe a little bit more about which peers you are looking at specifically for Pleo? And you talk about Pleo having higher growth rates than some of these peers. What -- are you looking at revenues, I presume? And what kind of growth rates do you forecast for Pleo compared to these peers? Just to put your sort of comments around that valuation into context. So that would be my first question, please.

[Samuel Sjostrom, Chief Strategy Officer]

Sure. The way you should benchmark Pleo against public comps is that you should be looking for SaaS businesses that have a pretty large share of revenue stemming from transactions rather than subscriptions. That's the way we address it. And we can attempt to be a bit more open around that perhaps in the Q1 in relation to specific names. As relates to Pleo's growth rate in relation to peers, we're comfortable giving you that data point we would have in the report. But just as a sort of an indication, the average growth rate of the peer group we're looking at is growing at around 30%, 40%, and Pleo is sort of -- it's 3 or 4x that.

[Oskar Lindstrom, Senior Analyst]

All right. Very impressive. Good. Two questions on the public-private valuation divide that we've also talked about already in the Q&A session here. And the first one is, is the increase in the divide really through the sharp decline in the valuation of publicly traded assets an opportunity for you to acquire more publicly traded growth assets? And then the second question here would be, is that increase in divide something that you think would sort of impact your or your partner investors' ability or willingness to make more investments? I mean it's just become more difficult to know what the true price is when you have that type of a divide and then you rather sort of weight with investments.

[Georgi Ganev, Chief Executive Officer]

Yes, I can answer that. The first part of your question, would we be interested to invest in a publicly listed business if it's trading lower than an exciting private business we're looking at. Of course, that is possible. We have a wide investment mandate, and we can own companies that are public. We can invest in companies that are public as well. But again, we wouldn't start from the valuation gap. We would start by looking at companies we really believe have strong overarching tailwinds for the long term. That's, I think, the starting point for us, as well as the team behind that business. If we think that is something we really, really liked and excite us, we don't exclude it just because it's public. And it needs to, of course, be in the right type of stage or phase, if you will. The second question is I think the appetite right now for stellar companies having these kind of world-class teams with growth rates 100% or more. It's a highly competitive market, and the appetite is there for sure. We haven't seen that weakening just because of the correction in the public market right now. If it continues, I think it would actually create opportunities for us and other private investors to actually invest in companies at lower valuations. So we wouldn't be too worried about that either. I think the bottom line here, as that -- I've said many times during this call, is to have a strong financial position and have a long-term mindset. Then I think we can weather this volatile market whether it's 1 quarter or 1.5 year.

[Operator]

Our next question is from Rasmus Engberg of SHB.

[Rasmus Engberg, Head of Research]

Just one question really. This timely release of capital through -- in the fourth quarter means that your net investments last year were less than SEK 1 billion. How do you look at that measure going forward if you're going to maintain a strong balance sheet?

[Erika Söderberg Johnson, Chief Financial Officer]

You mean the relation between net investments and net divestments?

[Rasmus Engberg, Head of Research]

Yes. Are there -- are you -- in your mindset, are there significant divestments also at hand for next year?

[Erika Söderberg Johnson, Chief Financial Officer]

We -- as we sort of always repeat, what we -- what's part of our strategy is to dynamically reallocate. So of course, we're constantly evaluation -- evaluating our current portfolio companies and our balance within our portfolio between the companies as we continue to invest and also as our companies continue to develop. So that is part of our strategy, to reallocate actively, which entails divestments as well as investments. Having said that, we also have a strong financial position, so we do not -- we are not forced to divest in order to sort of keep our investment momentum at a level we want to do going forward.

[Rasmus Engberg, Head of Research]

And the reason for asking is, of course, that you have really small positions -- I mean, small ownership shares in very large assets now. That's why I'm asking.

[Georgi Ganev, Chief Executive Officer]

Yes. But I think it's a fair point, right, because we don't look only at this from a strictly financial perspective. It's also about what value we add in the companies we own. So that is basically how we look at divestments. And on top of that, as you probably know, there is both ordinary and extraordinary dividends coming from Tele2, right? And as of the announcement earlier this week from Tele2, the plan is to basically dividend out the entire proceeds from the Netherlands transaction, which, of course, will be used, in our case, to reinvest in new, exciting businesses.

[Operator]

Our next question is from Nizla Naizer of Deutsche Bank. .

[Fathima-Nizla Naizer]

I have two questions. My first is sort of step back. And you've got exposure to a lot of consumers with your digital businesses. There was a lot of growth due to consumer habits changing during the pandemic as people [indiscernible] online. Now as conditions are sort of normalizing in your end markets, are you seeing [indiscernible] going from an elevated base? Just curious to see sort of how you are trending based on the vast exposure that you have with your retail portfolio. That's question one. Question two, Jobandtalent investment. Could you kindly take us through how they monetize the business? Is -- are you on retainer [indiscernible] business? Or do they take sort of a cut from every [indiscernible]? Some color there would be great.

[Georgi Ganev, Chief Executive Officer]

Sorry, Nizla, you're breaking up. We couldn't hear any of the questions, I'm afraid.

[Fathima-Nizla Naizer]

Oh, I'm so sorry. Can you hear me better now?

[Georgi Ganev, Chief Executive Officer]

Better now.

[Fathima-Nizla Naizer]

Okay. Great. My first question was on consumer habits that you're exposed to with the digital businesses that you have in your private portfolio. There was elevated growth during the pandemic because habits changed, people moved online. As conditions normalize, are you seeing that growth continue from an elevated base? Or is there a change that companies need to respond to, for example in your online groceries and at other sorts of consumer businesses? Some color would be great. The second was on Jobandtalent, just wanted to understand how they monetize the business? Are they on a retainer or do they take a cut from kind of every successful placement? Some color there would be great.

[Georgi Ganev, Chief Executive Officer]

Okay, I will start with the first question. Of course, there's been a pandemic effect, if you will, more customers going online. We've seen in the online grocery businesses also not only that the frequency has increased but also the kind of the basket size, right? That effect, we don't have going forward, and we didn't have it kind of end of 2021 either. So the comps are difficult. What we, however, see is that the target segments or the new customer segments that we've been able -- or company has been able to reach, they are still there, right? So I definitely see that we are -- we have moved the baseline. So we're starting from a higher kind of position in terms of penetration of these services. And as kind of growth stabilizes again and we move out of this extreme comp, especially when it comes to basket size of online grocery, we will have, again, strong growth from a higher level in terms of penetration. So that's the question on -- or the answer on your first question. The second question, I'm afraid I don't really know. I'm now looking at Samuel here.

[Samuel Sjostrom, Chief Strategy Officer]

Nizla, I think the way you should look at this business is as a marketplace, right? So they have a GMV, which is essentially what the clients are paying Jobandtalent and therefore indirectly their employees, and then Jobandtalent takes a take rate off of that. .

[Operator]

Our next question is from Andreas Lundberg of SEB.

[Andreas Lundberg, Analyst]

I think you touched upon it in general terms. Were there any imminent funding needs in any of your holdings? That's my first question.

[Georgi Ganev, Chief Executive Officer]

I mean, as Erika said before, we are ready to support our companies when they need, and we have a very tight dialogue. We can't really disclose what companies that are planning funding rounds. If they do, it's typically because they have great opportunities that we would like to back, hopefully. But we don't see any kind of pressure on any of the companies to raise capital right now because they're running out of capital immediately.

[Erika Söderberg Johnson, Chief Financial Officer]

But having said that, if there are great opportunities for them to grow, we would be happy to support them to do so. .

[Andreas Lundberg, Analyst]

That's very clear. And on your investment guidance, is it too early to talk about 2023?

[Erika Söderberg Johnson, Chief Financial Officer]

Sorry, what was the question? Yes, investment guidance.

[Andreas Lundberg, Analyst]

Any investment guidance beyond '22?

[Erika Söderberg Johnson, Chief Financial Officer]

No, no guidance beyond 2022. Let's see how this year pans out. But as we say, we -- this year, we invest what we've done on average the last 3 years, and we said we want to continue to keep up the investment momentum. I think it's too early to say more exactly where this will be sort of 2 years from now. But I'm pretty sure we will still think it's very important to maintain an even investment momentum in line with what we've done historically. But let's see when that day comes. We take this year to start with.

[Andreas Lundberg, Analyst]

And lastly, a little bit more on valuations. I mean, obviously, companies appear to be growing faster than your peers. Is that based on like expectations of [indiscernible]? Or is it more of a current situation? And is the expectation based on -- on peers based on Street expectations? And your own sort of expectations is on your company?

[Georgi Ganev, Chief Executive Officer]

Yes. But I think first, let me give you an over kind of view on that. .We're looking at growth, basically. For me, that's the indicator of a company being very successful with their customer value proposition. Looking at a company like Pleo, for instance, it's a product that is absolutely world class. We see that at -- looking at the customer satisfaction score. We see it from a team perspective, tech platform and so forth. The result of that is very strong growth historically and, of course, ambitious forecasts going forward. So it's a combination of both strong historical growth and strong growth going forward. But everything stems back to kind of having a great product and a great product market fit and a fantastic team. I don't know if you want to add anything, Samuel or Erika.

[Samuel Sjostrom, Chief Strategy Officer]

Just as it relates to growth forecasts, clearly they are educated by what the companies are targeting, but we make our own forecasts based on what they tell us. And those are, as you would expect, typically a bit more conservative and at times almost draconian. So it's not that we're taking sort of budgets and long-term plans at face value.

[Andreas Lundberg, Analyst]

And how much emphasize do you put on other valuation drivers, profitability, return on capital, et cetera?

[Samuel Sjostrom, Chief Strategy Officer]

Clearly, when we compose the public peer groups that we use in our valuations, we try to find a composite set of companies with financial profiles in line with the companies we are benchmarking against that set of companies. So, I mean, gross margin is clearly a very important parameter in that exercise.

[Operator]

[Operator Instructions]

[Georgi Ganev, Chief Executive Officer]

Okay. Thank you very much for listening and for your questions. And as a last reminder, we will report our results for the first quarter of 2022 on the 21st of April. So stay safe, everyone. Thank you.