VEF’s buyback strategy remains dependent on proceeds from future portfolio exits, management said in its third-quarter 2026 earnings call. The investment company reported a roughly 1% quarterly decline in net asset value, as operating gains at portfolio companies were offset by lower valuation multiples and currency headwinds.

Key Takeaways

  • Management prioritizes buybacks to narrow the discount to NAV, but has not established a formal framework without exit proceeds.
  • Portfolio performance added $10 million within the model-valued holdings, offset by $10 million of multiple compression and $3 million of currency losses.
  • Creditas reported 26% year-on-year loan growth and 30% revenue growth, while its valuation methodology could change in Q4 or Q1.

Table of Contents

VEF buyback strategy awaits liquidity

Chief executive David Nangle described a capital-allocation sequence moving from exits to debt repayment and then share repurchases. He emphasized that buybacks require cash on the balance sheet, explaining why VEF has not yet announced a formal framework.

Nangle expressed confidence that further exits would occur over the next 12 to 18 months, but declined to forecast their timing because of market volatility. Buybacks are therefore a stated priority rather than a funded program with a defined schedule.

VEF has repaid its outstanding bonds and replaced them with a revolving credit facility described as more flexible and less expensive, carrying a lower interest rate.

Operating gains fail to lift quarterly NAV

Chief investment officer Alexis Kamoudos said NAV fell around 1% quarter on quarter. Among the 29% of holdings valued using models, underlying business performance contributed $10 million, but lower multiples among listed peers removed the same amount. Dollar strength caused another $3 million reduction.

The remaining 71% of holdings, valued at their latest transactions, were unchanged because there were no new transactions during the quarter. Corporate cash declined $1 million through operating expenses and coupon payments, while bond and liquidity translation effects netted to zero.

Confio’s valuation was reduced by $5.1 million, reflecting a 3% weakening of the peso against the dollar and lower multiples for rate-sensitive fintech peers. Management attributed the markdown to currency and market comparisons rather than fundamentals, while reporting a stronger quarter in its working-capital and credit-card businesses.

Creditas growth meets a tougher valuation backdrop

Creditas, VEF’s largest holding, delivered 26% year-on-year loan growth and 30% revenue growth, marking its ninth consecutive quarter of acceleration.

Its carrying valuation remains tied to the $108 million Series G round closed in December. Nangle said a transition from the last funding-round valuation to a model-based approach would logically occur in Q4 or Q1, subject to discussions with auditors.

Strong operating performance does not guarantee a higher mark. Nangle said falling fintech peer multiples had created a headwind and cited a simulation showing a 25% valuation swing for Creditas between just before quarter-end and two days afterward amid Brazilian election-related volatility.

Abhi prepares for a potential listing

Abhi surpassed $100 million in annual recurring revenue and is planning an IPO of its profitable Pakistani business. VEF refined its valuation approach to incorporate an after-tax multiple alongside a revenue multiple.

Nangle also outlined a possible longer-term structure in which a portfolio company lists, VEF sells part of its stake and retains a large listed holding. He presented that as one potential future liquidity route, not a committed transaction.

Conclusion

VEF’s quarter highlighted the gap between portfolio growth and reported valuations. Its preferred next step is returning capital through buybacks, but execution remains dependent on securing exit proceeds.

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