European Event-Driven Analyst

Jesus Rodriguez Aguilar

Event-Driven

<a href="https://www.smartkarma.com/entities/kinnevik-ab" target="_blank" data-smartkarma-citation="entities:22407:1" rel="noopener">Investment Ab Kinnevik (KINVB SS)</a> (Kinnevik) is a Swedish conglomerate with investments in listed and unlisted companies, and new ventures. Kinnevik’s main shareholders are the founding families, who together hold c.10% of the capital and c.44% of the voting rights.
Kinnevik is a major shareholder in Tele2 and Zalando.
From my SOTP valuation, Kinnevik is trading at a 25.8% discount to NAV.
The discount to NAV of Kinnevik has averaged 15.7% over the last five years. It contracted to 11% at the beginning of February following the Millicom distribution, and has widened as a result of the coronavirus crisis, reaching a high of 37% on 23 March.
I expect the current discount to narrow and recommend establishing a trade LONG Kinnevik B/ SHORT Tele2 B and Zalando. This effectively hedges 77% of Kinnevik’s assets and leaves a relatively small exposure to both Livongo (6% of NAV) and the unlisted new ventures of Kinnevik.
<ul class="">
<li>The discount tends to increase on market shocks and meltdowns.</li>
<li>In this coronavirus crisis we can soon witness another capitulation and equity funds outflow momentum, if and when the volatility diminishes, the discount could tighten to 20%. It would be the moment to unwind the trade and wait for the spread to widen before re-entering the trade again.</li>
</ul>
The net inflow of setting the position is SEK 9.8666, and the negative carry (remember Kinnevik has stated it will not pay an ordinary dividend from 2020 onwards) would be c. SEK 4.0237, assuming 50 bps borrow and that Tele2 maintains the same dividend of 2019 (please see further in the note for the calculations).

Investment Ab Kinnevik (KINVB SS) (Kinnevik) is a Swedish conglomerate with investments in listed and unlisted companies, and new ventures. Kinnevik’s main shareholders are the founding families, who together hold c.10% of the capital and c.44% of the voting rights.
Kinnevik is a major shareholder in Tele2 and Zalando.
From my SOTP valuation, Kinnevik is trading at a 25.8% discount to NAV.
The discount to NAV of Kinnevik has averaged 15.7% over the last five years. It contracted to 11% at the beginning of February following the Millicom distribution, and has widened as a result of the coronavirus crisis, reaching a high of 37% on 23 March.
I expect the current discount to narrow and recommend establishing a trade LONG Kinnevik B/ SHORT Tele2 B and Zalando. This effectively hedges 77% of Kinnevik’s assets and leaves a relatively small exposure to both Livongo (6% of NAV) and the unlisted new ventures of Kinnevik.

The discount tends to increase on market shocks and meltdowns.
In this coronavirus crisis we can soon witness another capitulation and equity funds outflow momentum, if and when the volatility diminishes, the discount could tighten to 20%. It would be the moment to unwind the trade and wait for the spread to widen before re-entering the trade again.

The net inflow of setting the position is SEK 9.8666, and the negative carry (remember Kinnevik has stated it will not pay an ordinary dividend from 2020 onwards) would be c. SEK 4.0237, assuming 50 bps borrow and that Tele2 maintains the same dividend of 2019 (please see further in the note for the calculations).

Sweden

Kinnevik AB is an investment company focused on digital consumer businesses. The Company invests in and manages a long-term portfolio of listed and unlisted companies, and seeks to exert influence in the companies by board representation and other means. Kinnevik's portfolio is divided into four sectors, e-commerce and marketplaces, communication, entertainment, and financial services.

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Investment Ab Kinnevik (KINVB SS)

Kinnevik’s (KINVB SS) Hard Discount

Investment Ab Kinnevik (KINVB SS) (Kinnevik) is a Swedish conglomerate with investments in listed and unlisted companies, and new ventures....

Jesus Rodriguez Aguilar

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52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)