Vef AB (publ)

STO:VEFAB

Earnings Call Transcript 2022-Q3

[David Nangle, executive]

Good morning, good afternoon, everybody, and welcome to our 3Q '22 results conference call. I am speaking to you today from London, I'm sitting aside our CIO, Alexis Koumoudos. What we'll do for the next 15, 20 minutes max is run through a number of slides that are in our webcast presentation. The deck itself will also be available on our website in the IR page. We'll run through about 15 slides, giving you an update on all things happening at VEF and a guidance for what's happening in the future and then we'll open up to Q&A as always.

So moving on to Slide #2, just key events for the quarter, what the highlight. I think stability is a key word here for us and what we're doing after what has been a volatile or a first half with a certain amount of headwinds. Our NAV was broadly stable quarter-on-quarter in dollar terms, a slight uptake less than a percent and more so in SEC because of the weakness in the currency, but it was basically a broadly flat quarter, and that was just a function of the inputs, whether it's share prices, currencies or company performance, which is a lot more stable in this window than before. what we'll do in this presentation, again, similar to last time is focus on our valuations and our valuation approach.

I think it's very cognizant to a window like this and our NAV is obviously up the basis of that. And we've got quite a robust valuation framework here at VEF which we've honed over many years. And Alexis Koumoudos will run through that in this call. Our key assets, Creditas, which is approximately 50% of our NAV timely released first half '22 IFRS numbers just before this call a couple of weeks back, and they were strong as we've been updating the market on over time and strong from a growth point of view, but also from an operating performance point of view, and the trends ahead look very strong. We'll talk about that. We're talking 150% portfolio year-on-year performance for the period and nearly 250% top line revenue performance in terms of growth, and we like that clearly as investors.

And from a capital position, very focused in these kind of markets, and we're solid. And from a capital point of view, we were $64 million at the end of Q2. As of the end of Q3, we've seen on $56 million of capital. And for a company of our size and shape, it's a comfortable level with controllables embedded. And generally speaking, we're back on the front foot, we're not signing in the table that we're back to both markets, and we're loving life, and this is a great time to be investing but what I will say is having taken some medicine in the first half and spreading it in the ship, and we're feeling strong and good about ourselves than life.

And we're starting to lean back in, notably buying back our own shares in the market, which is one of the most obvious investment opportunities for us as investors that we've seen in a long time, and a couple of us upping our IRR [indiscernible] to attract a discount to NAV, which is something that we hate at the year.

Moving on to some of the numbers, just highlighting the NAV and the dollar point of view was $444.9 million, flat effectively quarter-on-quarter, as noted. And from a SEK point of view, we were up 11% quarter-on-quarter to just above SEK 5 billion from a total NAV. And then from a Pressure point of view, at SEK 4.79 billion was a quarterly mark, up from 4.3% in Q2. As I say majority of that is currency driven, flattish is probably the underlying theme, and they should think when you think about our NAV in Q3 versus Q2.

On Slide #4, you see an evolution of our NAV in dollar over time. And you kind of take up of that how this blip we take out the 2001 highs, and you've got a general gradual increase from left to right over time, which is probably what an investment company like us should be looking to achieve. We welcomed all the 2021 has to give us and but has given it back in the market this year, and we've all seen that. And for the last couple of quarters have been stable from a valuation point of view. We've taken our market impact and our market medicine in Q2 of this year, we feel.

And that's kind of reflected in Slide 5, as we start to look at valuations and valuation impacts and ideology, but a lot of what impacts the valuation of our companies is what's happening in the broader markets. There is individual micro level performance for companies in our portfolio but from a valuation point of view and from a currency point of view, we're slaves to the market in that regard to a certain extent. And what we've seen after the sharp sell-off in the first half of the year for stocks globally, but within that tech to a higher beta degree and fintech within us we had a very stable Q3.

There was slight offs in the various indexes of minus 1 to minus 5% of the global fintech indexes we look at, we're not perfect proxies, but they give or take a feel for the market. So that's fed true to everything we do on the valuation front and provided a lot more stability, and we're looking more on the underlying performance of companies and less on the mark dramatic moves either left or right.

And then from an individual portfolio point of view on Slide 6, I guess the main moves for us in this quarter, even though the macro effect of the bottom line was flat quarter-on-quarter. You had an uptick of 8% quarter-on-quarter from Credit taxing and that's the underlying performance of the company that's growing 20 to 25% top line quarter-on-quarter going against some of the multiple contractions we're seeing in the market and a bit of a headwind, single-digit percentage on the currency.

And working against that uplift in the portfolio, a couple of names worth highlighting, and we reduced our valuation of our position in Finja in Pakistan. And that was a conservative move in a country which has gone through a lot of headwinds right now, both from a macro political and it's speeding true to the overall environment. But Finja specifically within that was raising capital and that capital raise got delayed, which is now closed, but then impacted the ability to get capital to the door and grow in quarter tough window so we went conservative with our valuation there down 60% quarter-on-quarter.

And also worth noting Magnetis and BlackBuck, which also are down 26 and 29%, respectively, quarter-on-quarter and a lot of those are market moves, specifically BlackBuck. It's market multiples of pure comps and a direct correlation to us marking down that position. No disrespect to the company, which is performing on plan and as it was for the first half of this year.

And at this point of the call, I'm going to pass over for next 3 slides to Alexis, who's going to talk a bit more about our valuation framework and approach and give you a bit more detail on one of the very important and topical aspect of what investors in the markets are looking at today with investment companies like ours.

[Alexis Koumoudos, executive]

Great. Hello, everybody, and thanks, Dave. As Dave mentioned, we just wanted to provide a bit more detail to our investors about how we think about the valuation approach at the end of each quarter and valuing our business at a fair value and then also disclose a bit more information about portfolio performance.

So on this slide, what you can see is our valuation framework, which we tried to lay out diagrammatically. Effectively, the way that we value our portfolio companies is we bucket them into 2 categories, both sort of raised significant transactions within the last 12 months, and those have raised more than 12 months ago. So if a company in our portfolio has completed a transaction within the last 12 months and a significant transaction that includes high amount raised of equity funding and from new source of capital.

Then we run a shadow mark-to-model analysis for that business. And if the shadow mark-to-model valuation validate the latest transaction valuation, then we use the latest transaction valuation. If the shadow mark-to-model valuation indicates that the valuation requires adjustment. And that can be because there's been a change in the environment, i.e., peers, multiples have moved, currencies have moved or the portfolio company has changed the traction and performance, then we will calibrate the methodology to reflect the current either environment or performance of the business. So that's how we get to latest transaction valuations and calibration methodology. Once the company is in mark-to-model, we are looking at a host of peers.

We are using our own proprietary model for the business and forecasting the business out with we are taking into account, obviously, local currency moves and that results and culminates in a multiple-based valuation approach for mark to model. What we're doing as well for our portfolio today is we do not take into account some of the downside protection that is offered by preference shares. And the reason that we do that is to err on the side of conservatism given the current uncertainty in the environment. So we value our portfolio based on a common equity basis.

On the next slide, what we wanted to disclose is just a bit more detail on the dispersion of the portfolio and the different valuation methodologies that the portfolio companies are utilizing. So from a portfolio basis, we have 17 portfolio companies. One company is valued on a calibration methodology basis, and that is Creditas. We have 7 market latest transaction, and the rest are on a mark-to-model or REVO, which is marked 0 given the situation in Russia today. That means that we have 49% of our portfolio, which is Creditas, marked to calibration methodology. The business, they raised capital in January 2022 and again, in the recent acquisition of AmBank in July 2022.

And we have calibrated that valuation since January to today to reflect the change in market moves and market prices of the peer group in public markets. I think what we want to highlight with the latest transaction, so the latest transaction portfolio companies represent 26% of the portfolio is the significance in size of the transactions that we're using to mark these companies to and also the recency of the transactions.

As you can see, 5 of the 7 transactions were completed in June and onwards, and the other 2 were in April and March of 2022 and the rest are mark to model. The last slide that I wanted to present just gives a bit of color on our NAV and portfolio performance. As we've communicated, we have taken what we feel is a significant reset on our NAV to reflect the current environment and hopefully, the details on our valuation methodology has helped to give confidence in that given that 74% of our portfolio today is now either mark-to-model or had valuation calibrated to the current environment. And the other 26% is based on very recent and significant transactions.

On portfolio performance, I think the 2 points that we wanted to make, which I think helps give a bit of confidence in the performance on the portfolio is, number 1, on a portfolio weighted basis, our portfolio companies are growing revenue 120% this year, and that's an estimated number for 2022, but very much deliverable based on our forecast and how the companies have delivered year-to-date.

And the second point is that 65% of our portfolio can reach breakeven with their existing capital position, including capital that's been raised over the last 6 to 12 months giving us a comfortable position for 65% of the portfolio. The remaining 35% are either at early stages or in high-growth mode, and they have a weighted runway of 17 months, which we feel gives our portfolio, again, just a great buffer to continue to deliver, grow and then create opportunities and options for capital down road.

[David Nangle, executive]

Super. Thank you, Alexis. Look, back to me and a few more slides. I'm going to switch on a couple of more items before we summarize and open up for Q&A. But, you know, Creditas, we can't pass the quarter without speaking about that, our key assets. What we have in the next 2 slides is a summary effectively high-level summary of their first half '22 IFRS release full with a strategic outlook. So this is all public information out there in the domain.

I think just to grab a few highlights here, that Creditas are still very much a growth story and irrespective of the environment that we're all now operating in with top line growing 250% year-on-year and originations portfolio growing 150% year-on-year for the first half 2022 period. It wasn't all rosy in the first half 2022 because it did see margin pressure. And that margin pressure was basically led by the increasing rates in the Brazilian market, which was driven by higher inflation and Brazil was quick to raise rates and also the front-loading as to quality costs and one of the high-growth environments under IFRS.

And what we have there is a company in Creditas after we've seen through many incarnations and cycles acting quickly. Lots of initiatives inside credit asset we thought it's from the off back in February when Sergio Furio, the founder of that company took the Board by its grip of the neck until the plan was changed and the plan to act. So we kept the machine growing, and we see the portfolio growing strong, repricing on the asset side of the portfolio has been aggressive and quick and that's repricing it's feeding through to top line. And that's all feeding through to a margin bottoming in the first half at the end of about 10 and 11%, and we're starting to trend back now to more of those 40 to 50% recycled gross profit margins.

We made an acquisition of the bank, which also brought in equity and cash into the business, but the bank itself gives us access to deposits and new line of funding for credit [indiscernible] cycle and also dealing with cost sort of customer acquisition costs or general costs. But from a business point of view, the analyst in us loves where Credit access is sitting today as we look at a company, which is still at a very strong volume growth story. But with margins bottoming they're also looking at margins widening from here and costs falling.

We kind of support the forces all coming together and look quite beautiful in an excel spreadsheet as we look into next year and the year after, which makes us very comfortable and confident in what is still very much our biggest asset. From an Investor Relations share price market cap point of view, our share price has been bottoming, let's say, over the last few months, in line with our nerve per share. We've seen a slight uptake of late but I guess what's key on this, and it's really around the discount to NAV, and that's something that we've lived with on and off over time as an investment company, sometimes at a premium, sometimes at a discount. We've never been at such a significant discount for such a significant period.

And while we understand the many reasons why that can happen to a company like us in a market like this, it doesn't make us happy about it as shareholders and people running this company for shareholder hence, we want to do something about it. And we are very active on this front, not that we can control the markets, but there are controllables within that. I think front and center is the buyback, and this goes back to the robustness of the valuation approach.

If we didn't believe in or now, we wouldn't be buying back our shares, and we certainly do. So we initiated a buyback program of $10 million and we started that back in the early part of Q3. We've done about $2 million. It did about $1 million a month in that at the moment. And we've been buying back our shares at very healthy levels. And it's just simply the most obvious thing for us to do with our capital right now and that's the biggest hurdle for us about capital than anything else given the IRR potential in our own shares and our own portfolio right now.

Also on the Investor Relations and Pure fronts, we're very much on the front foot marketing and our story, we feel confident enough again to do that. We've got new initiations of coverage from investment banks like KBW and Carnegie that's now 5 investment banks covering what effectively is the small cap stock. So it's great to have those guys covering our stock and marketing our story. And we're leveraging off our portfolio of companies, not to be people like Creditas comp, you are at investment bank events.

And we're putting out our own published research on some of our companies, which are kind of rising stars like Rupeek in this quarter and Juspay we did in the first half of this year. And this is all publicly available information on our story that we're getting out there to the market to bridge that gap from understanding of what can be a time has got no pay structure because we're an investment company investing in private companies.

And we want to give more on those private companies, and that's where we're finding ways to do that. And that increased transparency is coming through in our valuation approach, communicating the growth of our portfolio, cash need, Creditas I think it's going to be a leading light for us on this regard, and it's important with IFRS disclosure. So that's all being fed true to the market. And then just performance over time of the portfolio and of everything they do at that.

So from our point of view, we are grabbing this situation. We have controllables. We have levers. We're pulling them. We're working them. It does seem to be working on the share price, [indiscernible] markets go, but this is something that's very much in focus for us as management and as shareholders of the story. From a capital position point of view, we ended Q2 at $64 million.

This is Slide #14. We're now on $56 million at the end of Q3. We've done a kind of flow chart analysis out into the end of 2023 of the various moving parts whereby we set aside $10 million for portfolio needs. Most notably, we're looking at the top end of the portfolio from names like by [indiscernible] and Creditas and buybacks $3 million to year-end, and then we'll probably hold back when we get to $5 million just half a lot of amount and then coupon payment and OpEx. And I guess the message here is we've got comfort with our capital position and its controllable within that. And the controllables, you know, the urban flow over time but for us, the mating is there big companies, i.e., the top 3 are well funded on a growth path to breakeven.

And with the money we have to get a slide was what they have, we're very comfortable that they are there, and that's key. Beyond that, we can choose or not to invest or support company that bears points in the cycle. We've got no obligations within that. From an equity debt, exit position as money flows into the company we're constantly looking at optionality around that over time. And that's something we've done in the past and can do again in the future. We raised a bond earlier this year. We raised equity last year. We've had exits the year before that. These things come and go up through our cycle. And then the controllables around costs and buybacks is always there and upper sleeve, and we can maneuver them should we see fit over time.

And I think on the right-hand side of the slide, I think the key things around to note here, beyond the bond itself, which was a SEK 500 million bond translating the dollar has fallen in value from a dollar point of view, is less today than it was yesterday at $44 million versus 53. I think we've got quite a high liquidity position today at the end of Q3 of 13%. Our debt to NAV ratio is quite low, relatively speaking, at 10%. I'm going to saw that net cash positive position of $12 million as of the end of the quarter.

One slide on ESG before I wrap up. And I think on this front, 2 things happened during the quarter, which we're very proud of. One is Mahaana, we made an investment into Pakistan's first digital wealth management company, really focusing on the pension market opportunities that is in Pakistan. And this is run by Shamoun, a friend, former founder of [indiscernible], and asset manager in Swedish and emerging markets, a phenomenal opportunity for the pension market in the Pakistani market, very early days in that but Shamoun is the person to build it, and we're very privileged to be asked to back in day 1 in that journey, and that's clearly fit into the social financial play that we raised money for in our sustainable bond earlier this year.

And then Jumo, always front and center of everything on the [indiscernible] finance front, earned their B Corp certification, which is one of the highest level and achievements you can in the sustainable finance world. And there [indiscernible] always a rising star in that regard within our portfolio. And to wrap before I open to Q&A, what I would say to investors and the market, you know, in the first half of this year, we very much played defense and I think it was the time for defense. We strengthened our balance sheet with the bond. It was the right thing to do, get capital in the door.

In our portfolio level, we focused across the board, but we had a lot of folks on the top 3 because that's where the market focus and that's a big part of our NAV and success story today and tomorrow. And we make sure that they have enough capital us I mean the shareholders around the table, they're in a strong position, some enough capital to grow at a healthy rate through to a planned breakeven and beyond. And then we addressed our NAV in Q2, we invested, we addressed that hard and directly, and we're very comfortable with our now position hence to roll into Q3, which has been quite stable and able to keep words in this regard. And then we have defense in place.

In Q3, we started to lean back on the front foot. As I say, this isn't the best of operating environments, but it's not a great shopping period. And in fact, from a pipeline point of view, even though we're as busy as ever, it's not like we're seeing the opportunities we want to see in private investing, i.e., best-in-class private companies at public market valuations or below. We're not there yet, and we probably will get there next year hence the money that we have on board are putting to work towards buying back our own shares, which is the, I would say, the most obvious value accretive thing we can do. And how does that then we're marketing our story and working on that discount to NAV. And from a capital position, I've dealt with that, we're comfortable with controllables within that of $56.3 million.

And then our key asset is Creditas, and that one is a company that is now producing its IFRS results, growing off a strong base and it's very much up in terms of volume growth, widening margins and falling routed costs, which are an annual stream when it comes to looking at the financial companies and beyond.

I will stop there, operator, Sharon, I'm very happy to open up the Q&A at this point.

[Operator]

[Operator Instructions] We'll take our first question -- and your first question today comes from the line of Ermin Keric from Carnegie.

[Ermin Keric, analyst]

Three questions, if I may. The first one would just be, you obviously mentioned that several of the holdings are now sort of trying to accelerate the pace to profitability. Could you give us any flavor for how large part of the portfolio is expected to be cash flow positive let's say, by the end of next year. And then if you could talk a bit more on the outlook for Juspay. It sounds in the report like you're quite optimistic on that holding and the value creation from that going forward?

And then lastly, just on Finja you mentioned the macro headwind in Pakistan is on. I think I heard that you're also saying that there's an ongoing round there. Should we think that you're not participating in that and how should we see the impact on your other investments in Pakistan?

[David Nangle, executive]

Super. Thanks for that. Let's work it backwards. I'll do Finja Alexis will jump in on Juspay. And I don't know if you want to talk about profitability give a hell of kind of in your slides. But so on Finja and Pakistan in general, the macro overlay and then as a micro story within that. And we've got 3 holdings in Pakistan. So from a macro overlay, I think geographically and the other broad here, we're quite lucky or good, depending on how you look at it with the geographic exposure that we have today.

The countries where we're heavy are Brazil, Mexico and India. And each of them have a strong economic case to be made within an emerging market or a global context today. And because there are some car crashes out there, as we all know, from the Russia's to Turkey, in the U.K. for that matter. But Pakistan is a one country, they've seen a lot of stress within our portfolio, not being stressed at a macro level, whether it's importing commodity inflation and food inflation for what is an important country. The obviously played havoc with the current account and the balances at economic level, not for pressure on the currency and the debt level and the bonds and all good stuff that you see in emerging markets. You add to that a political let's call it a crisis overlay.

We've had ousting of 1 p.m. and the incoming of another some political infighting in between. And then you overlay that with floods where I think at one point of the quarter, the country was under water so hit a humanitarian crisis. So a lot of weight or pressure on that country stroke ecosystem. Hence, there's going to be some fallout from that for anybody who's investing in that country, and we're investors in that country.

But what is not the fintech to invest in mostly focused on the cities, and the cities have been broadly on touch from the floods and the economically they are broadly resilient. Hence, to answer the last part and I pin your question, you know Mahaana, we just invested in day 1 stuff and are actually profitable, but a very early stage and very small. AbbVie raised an exceptionally good time. And sometimes you're lucky with timing. And they're sitting on I'm going to pick a number, about $50 million of hard currency sitting offshore while they're growing their business onshore still very robust business positioning and growth story there from the last investment round.

Affinia was unlucky, I guess, with its timing in terms of raising money was going to die at the storm and to trying to raise money in the summer of this year. And that meant that's kind of led to them slowing down growth and slowing down projections and plans and tightening up a bit, which is the logical thing to do in a window like this. Hence, we pulled back with our forecast and evaluation of that, and it's got a lot more conservative unlike the other 2 names in that country.

But that said, that funding round has closed. I won't give too much details on it yet, and we are not part of that. It is a direct investment from one entity that we've been working with as a partner for Finja and that's a welcome news, and that will mean the company will get back on to a gross booking as they kind of pulled off the throttle for the last 3 to 6 months, hence, the valuation decreased there, but not in Abi or Mahaana.

Moving on to Juspay Alexis, do you want to grab that one?

[Alexis Koumoudos, executive]

Yes, sure. So on Juspay, as you mentioned, we're very bullish on the outlook for Juspay and its potential to create value for us and our shareholders. So Juspay is delivering on all fronts. They are becoming more and more core as a payment service provider and a payment platform in India. UPI and mobile payments in India is really taking hold, and digital payments are becoming a larger portion of payments within India getting higher penetration. So on all aspects, we're very bullish on the outlook for Juspay, they still serve some of the largest merchants in India.

The big enterprises have very, very low churn and they're broadening the product suite and showing their ability to charge higher and higher prices. And all of that being said, I think one of the key things as well at Juspay is that it's becoming a very strategic asset in India. There aren't many large payment companies. Payments in India have been take rates and low revenues. And Juspay has shown the ability to grow a very substantial strategic business for India despite those challenges. They have a very large market share of digital payments in India. So it's one of those companies that are now its mark-to-last transaction.

And, you know, when we have shadow market models in the last transaction, this is one that we could see adding real shareholder value in the coming quarters.

[David Nangle, executive]

Yes. That's a nice way to put it Alexis. And then to answer your first question maybe I'll start and let [indiscernible] to overlay. So I guess how do we think about it? We want comfort that our companies can get to breakeven with or without more capital that will be the ideal. I think as Alexis showed in the slides there, a 65% can and 35% can't or are needy. Within that 35% is Compo, and they have a capital solution at play to get to that breakeven so we're comfortable they can be layered into that. Will there be cash flow positive next year or the year after? Do we care?

Do we not care? We just care once they have the capital and the business model economic to get to breakeven in the current environment. So I guess specifically names like Nibo, names like Rupeek are some of the bottom, smaller names in the portfolio are profitable as is Mahaana, Abbie is actually profitable, give or take right now. And then names like Creditas, and just they could be profitable next week if they want it, but they choose not to, given the resources that they have. So I think that 65%, 35% ideology [indiscernible] is a good one to focus on from a risk reward point of view right now.

Some of that will ebb and flow over time, Ermin. If markets get better, companies may feel more bullish and wants to grow faster and burn more. If markets get worse, companies, you know, might have never seen their dollar come in through the door, and they'll have to get to breakeven or they'll die and that's the reality of these markets.

[Alexis Koumoudos, executive]

Yes. And I don't have much else to add. I think this is we're not saying that 65% of the portfolio will be cash flow positive next year. I think it's, but the idea is that these guys have the ability to and they have the resources to. And then the decision comes down to the company and they have the luxury of that decision.

[Operator]

[Operator Instructions] We will now go to our next question. And your next question comes from the line of Andrew Stimpson from KBW.

[Andrew Stimpson, analyst]

Two questions from me, please, one on cash and then one just on the broader fintech landscape, please. So the first one on cash, that slide, I think it was the penultimate one that you showed on the cash position is really, really helpful, but I guess it also then, as you'd expect for the net analyst it also then raises some other questions. And I just want to be clear because you've spoken about a net cash position before. But that slide sort of suggests that you'll shift into a negative cash net sorry, a very positive cash position but a negative net cash position of about 17 million by the end of 2023. Is that something you're comfortable with and what kind of level do you start thinking it's too low? I'm aware that's a particularly tricky question. So just wondering how you would invite us to think about that slide would be helpful.

And then secondly, just on the broader Fintech landscape. What are you seeing from the other fintechs out there because I guess it's very encouraging that again, that 65-35 split and showing how well funded your holdings are. That's, again, very, very welcome information. But I guess not all the firms out there are so well funded as your holdings. And I'd expect some of them to be knocking on your door asking for some fresh investments.

And so I'm just wondering, have I got that wrong? What else are you seeing out there? And the reason why I'm asking, I'm just trying to judge what kind of advantage that is and how special are the ones that you hold that they have actually thought ahead and funded ahead versus all the other fintechs out there, please.

[David Nangle, executive]

Super. Look, thanks, Andrew and we welcome the questions. And when like I say we're generally speaking, when I say we're leaning forward and we're feeling comfortable we haven't got everything in our favor, and we've built up some challenges that goes in a thing in a window like this. Our capital position, you're correct.

We laid it out to be clear on Slide 14, for everybody to see. And we are comfortable going to net cash negative position as the that's the extrapolation of what we're seeing from the plan from here for the investment portfolio needs the buybacks that will take us as opposed to a net cash positive of $12 million in Q3 towards 0 and then towards negative of the extrapolate towards the back end of next year. And then this becomes quite fluid, [indiscernible] managing the company at capital level and liquidity levels. And I guess there's a number of forces on this to add more capital into the company in due course and that will have to happen, clearly speaking, if we're looking at over time, whether it's exits or positions, and that's something that we're always working on from the top right through to the bottom. You know, we've got a bond out there in Easter, just before Easter of this year when the markets go was up in a very small window.

It was the right thing to do. That obviously brought debt onto the balance sheet but in terms of strengthening the balance sheet with a 3-year duration, it was very clear and key. Also this will start [indiscernible] slightly touch on your second one, but we talk to our investors a lot our key investors, our top shareholders, and the communication is strong, and their support for us through cycle has been there. And we told them openly that it's not the right time to give us more capital. So we be leaning in or has been leaning out standing on their position.

But it's not the right to give us capital because we don't see the opportunities expand by our shares and to put that capital to work. And that's the second part of your question, which I'll be it in a second. But just to extrapolate on the cash point of view, we're constantly looking at the solutions of bringing capital in and we're constantly stress testing capital going out. And we think the money put to work in our portfolio on buying back is so value-accretive that will be wrong not to do given the context of the capital that we have today, albeit the decisions that we make will evolve over the next 12, 18 months with markets, conversations with shareholders and then the activity of the money and our money out as we go.

To the second question, [indiscernible] it's interesting. Once again, we're not saying we're great and everybody else is rubbish. We have a strong track record and I guess, right now, we have the top end of our portfolio in very good shape, and that's key. So why are we fighting fires? we talked about names like [indiscernible] where we've marked down physicians, nothing is on fire, but it's more work at that end, and that's where we're doing our work from a valuation point of view. At the top end, these are companies that are they're more mature in furnace. They've been around for 10 years.

So it's not start up investing in 3 years and kids who develop an app and burn money and no uneconomic these are quite robust, actually cycle emerging market businesses as well. As that's the other thing, emerging market founders are building crisis, and this is just another one. I have to go with the rest. So we like that robustness of it. So I guess it depends where you're sitting with its region or stage of investing and if and what prices you invested out and what you've got into and we make mistakes like everybody else. But I think on average, we have been good.

And I think our 65-35 ratio is on average better. And there will be pain out there, I'm sure as we go. But then the flipside about this is our cash position in the first part of your question and then the second part is, is there blow in the Street? Is this a great vintage? Is it a great time to go shopping? And I guess what I've been telling our investors who have been leaning in from a capital point of view is no, it's coming, I believe, next year could be a very good year for investing for people like us where relationships track records, opportunities where we can get best-in-class private fintech companies at quite robust valuations.

But right now, most of the best companies have enough capital to see them through, at least from next year and nobody wants to touch the market. I mean the half the social markets are, and they're probably the ones you don't want to touch at the price that they're looking for. So it's very inefficient for private markets, unlike the public ones, but they're in line of some of the opportunities.

[Operator]

There are currently no further questions, I will hand the call back to you.

[David Nangle, executive]

Super. Thank you very much, Sharon. And look, thank you, everybody, for taking the time to be with us this quarter. Thanks for your support and looking at our stock, Peter from the analyst community or from the investor side. I think the key message here for us in the quarter is stability, comfort, confidence.

We're feeling good about life as best irrespective of what is still a very tough environment. And that's the message we're portraying that's come through in the numbers and it comes through in the buyback and it comes through from the results and credit that's most importantly for us. Any specific questions around you need from us always feel inclined to lean in, direct to myself, Alexis or our CFO and Head of Investor Relations, Henrik Stenlund on Stockholm.

[Operator]

Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.