Kinnevik
become increasingly complex over time and share of proceeds may significantly deviate from its percentage ownership of the company issued equity accordingly an increase or decrease in value of an company equity where liquidation preferences are plicable may result in a disproportionate increase or decrease in the fair value of liquidation preferences may also entail that the fair value of investment remains unchanged in spite of the assessed value of a particular company as a whole changing materially an unlisted company transition into a publicly listed company may also affect the value of due to the dismantling or triggering of such provisions liquidation preferences as described above naturally become more relevant during a market drawdown such as the one we are experiencing during the majority of our investments carry these types of down side protection provisions and the effect of these provisions become the most pronounced in companies where we have only invested in the latest financing round in these investments the fair value of our investment may remain unchanged in spite of material adjustments to quarter the aggregate fair value impact from liquidation preferences amounted to approximately and was primarily to a handful of new investments made in and early the same figure amounted to around in the previous quarter and the difference was negligible at the end of as such the incremental effect in the second quarter amounts to and in the first half of this value difference means that if would not enjoy said liquidation preferences the fair value of the unlisted port folio would be lower in other terms the underlying value of investments in these companies needs to increase by or around percent on average before the accrual of an on per return on investment this notwithstanding the fair values included in net asset value statement correspond to the proceeds is entitled to receive in the event of a sale of each investment at the assessed underlying value of each company aggregate value changes and drivers on average the valuation of each of our companies decreased by more than percent in the second quarter of and by more than percent during the first half of excluding the companies where our valuations are underpinned by transactions that took place during or shortly after the second quarter the average decrease exceeded percent in the second quarter and amounted to almost percent in the first half of similar to the previous quarter the continued material derating in public growth equities used as valuation for our private businesses was the single most important driver of the value change in our unlisted portfolio during the quarter indicatively multiple contraction had a materially negative effect of on our valuations in the quarter excluding the valuations that are underpinned by arms length transactions in the quarter and thereby concluded in the current valuation environment the effect of multiple contraction was closer to revenue growth offset some of the impact of compressing valuation levels with a positive contribution of around particular against the dollar in aggregate contributing to a positive effect on the valuations of our unlisted investments of around as outlined above the incremental positive effect of liquidation preferences in the quarter amounted to the aggregate positive effect from these two factors of is what bridges the material downward reassessments of the underlying valuations of our unlisted portfolio to the more modest percent write down outlined in our net asset value statement for the first half year the positive effect of currency movements amounted to and that of liquidation preferences in constant currencies amounted to or in total our relative to their valuation peer groups in our interim report for the first quarter of we rearranged our statement our aim with the new categorization is to group our private investments in a more refined way sorting them with their shared publicly listed comparable companies in mind this we believe together with the aggregated financial metrics we are now providing for each category is a step forward in terms of transparency of the performance and our assessed valuations of our unlisted assets the table on page outlining these financial metrics for our new categories and their peer groups should be read together with the qualitative commentary provided on the following pages please also note that the averages for unlisted are weighted by fair value and provided as indicative ranges for the categories where our companies are growing at materially higher rates than the peer group average our valuation multiples are typically at a premium to the peer group average this spread is calibrated by valuations ascribed our businesses in arms length transactions and by the correlation between growth and valuation multiples in public mar the average premium is considerably smaller when our valuations against more richly valued constituents in each relevant peer group premiums to the peer group average multiple narrow over time as our companies continue to outpace the growth of its valuation when relating our assessed valuations to financial metrics a year further out than the next twelve months virtually all of our valuations are within the ranges of their respective peer group value based care value based care consists of care delivery companies that take risk on and are paid on the basis of patient health outcomes our invest in this category and are against a peer set of businesses in various ways delivering or driving a shift towards value based care such as oak street health health and signify health on average the companies in the peer set grew revenue by percent in with gross margins of percent and trade at around revenues our businesses grew twice as fast with slightly gross margins and are valued at around revenues on average the fair value of percent in amounts to down some percent in the quarter the revenue multiple has been compressed in line with the peer group average of around percent and remains at an unchanged premium to this aver age considering revenue growth significantly outpacing the listed while proving sustainable gross margins in its more | Kinnevik
Company
Deck Type
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Industry
Deck date
July 2022
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