Kinnevik AB cuts leverage, 2016 net asset value fell by 2%

Kinnevik

Kinnevik AB, one of the part owners of Konga, Home24, Zalando and other startups said in its full year result that its wary and careful of leverage.

The decision is evident in its 2016 review where Kinnevik AB said its total asset value is SEK 72.4bn, the company disclosed that about 2% of its portfolio value is leverage.

The negative performance of its investee companies has further shrunk by SEK 2 billion, or 3% year on year. The loss in value was caused by SEK1.9 billion decrease in the value of the listed investee companies

The Swedish technology investor said it is targeting a maximum of 10% of its portfolio value to be leverage.

On the surface, some of its investee companies did well in 2016. Zalando had preliminary fourth quarter revenue growth of 25-26%, Millicom’s largest market Latin America reported cable and mobile data revenue growth of 6% and 17%, Tele2 grew fourth quarter revenues by 18% while MTG reported an organic revenue growth of 8%.

The company still did serious investment in 2016. Full-year investments of SEK 3.4bn, focused primarily on investments in existing companies. The company said it invested net amount of SEK2.8 billion. One of its major investee that benefited about SEK898 million was Tele2 which went through a right issue

Kinnevik was silent on its investment in Konga, one of the major eCommerce companies in Nigeria. Konga has not raised new funding and Kinnevik has not disclosed it will be participating another round. Naspers, its partner investor in Konga has not made any statement either.

In an opinion article he wrote to put forward his position on the current state of the company, Shola Adekoya, CEO of Konga suggest that Konga has received investment. He was not clear when, from whom and how much.

Conversely, Kinnevik is not the only tech investor that is reducing debt investment. Rocket Internet, the parent company of Jumia and an investment partner of Kinnevik is also striving to reduce debt, cut debt and reduce burn rate by collapsing loss making startups with similar propositions into one operation. This was what Rocket Internet did with Jumia.

With its cautionary outlook, the company might not be doing big deal this year. However, it is interesting to see what Africa’s third largest tech investor will be doing differently.