Report for the Third Quarter 2022 in Katalysen Ventures

Summary of report below. Full report attached and available under Investor Relations on Katalysen.com. All currencies in SEK unless otherwise specified.

A. VENTURE DEVELOPMENT KPIS (LAST PERIOD WITHIN BRACKETS):

• New client agreements during the period: 0 (3)
• Active clients at the end of the period: 13 (13)
• Total calculated market value of Katalysen’s portfolio (shares, options, and convertibles) at the end of the period: 227.0 MSEK (209.2 MSEK)
• Quarterly portfolio growth (shares and options) excluding new cash invested during the period: 6.7% (0.4%)
• Value added to the portfolio from new shares and options obtained via non-cash investments during the period: 0 MSEK (3.2 MSEK)
• Note that while the third quarter delivered portfolio growth in line with long-term expectations on the Company’s ability to create value, portfolio growth during the first two quarters of the year fell short of expectations (primarily attributable to market uncertainty), and taken together the Company is expected to fall short of its 30%+ annual portfolio growth target.

B. GENERAL KPIS:

Group (parent + subsidiaries):

• Net sales [thousands]: 1 254
• Profit after financial items [thousands]: -2 801
• Balance sheet total [thousands]: 102 508
• Solidity: 97.0%
• Earnings per share: -0.50
• Number of outstanding shares: 5 570 995

Parent:

• Net sales [thousands]: 1 254
• Profit after financial items [thousands]: -1 356
• Balance sheet total [thousands]: 101 056
• Solidity: 98.6%
• Earnings per share: -0.24
• Number of outstanding shares: 5 570 995

C. IMPORTANT EVENTS DURING THE PERIOD:

The Q3 period was characterized by a complete focus by Katalysen on the needs of the current portfolio. Decisions made during Q1, Q2, and Q3 to make smart reductions to burn rates are resulting in extended runways in the portfolio. No extraordinary events were recorded during the period.

D. IMPORTANT EVENTS AFTER THE PERIOD:

2022-10-03: Katalysen launched two new segments on its website. “Expertise”, elaborating on Katalysen’s tangible expertise offering to early-stage ventures, and ”Venture Development Applied”, elaborating on three example client cases. Learn more at www.katalysen.com.  

2022-10-24: The board of directors of Katalysen Ventures resolved to carry out a directed share issue of 271 214 new shares at a subscription price of SEK 28.0 per share corresponding to a discount of approximately 11.7% compared to the the volume-weighted average price for the KAV share over the period 2022-10-03 to 2022-10-24. Through this directed share issue, Katalysen received proceeds amounting to approximately SEK 7.6 million before transaction costs. Total transaction costs were estimated at SEK 400 000.

Due to the prevailing market climate at the time of the decision, the board concluded that there were no suitable conditions for carrying out a rights issue on favorable terms. As such, it was decided to conduct a private placement. The board assessed that the signing investors are likely to provide significant strategic, long-term value for Katalysen and its shareholders. Participating investors included:

• Alex Schütz through his family office, Mr Schütz is the founder of C-Quadrat Investment Group with over EUR 8 billion in assets under management. Mr Schütz is an active and well-known investor in tech companies. Collaboration between Mr Schütz and Katalysen Ventures regarding a venture fund is in discussion.
• Klemens Hallmann, a highly public entrepreneur and philanthropist, and the founder and sole owner of Hallmann Corporate Group, one of Austria’s leading groups of companies with investments in real estate, finance, technology and film production.
• Philippe Givel, former Global Head of Risk of trading and sales at a leading wealth manager and private bank. Mr Givel has a wealth of expertise relating to risk management and banking.

Funds raised in the private placement will extend Katalysen Ventures’ runway, a move designed to adjust for delays in ongoing exit projects (due to current market conditions). The additional funds will also ensure Katalysen Ventures’ ability to conduct follow-on investments in existing portfolio ventures.

2022-11-04: Katalysen announced that Emil Ahlanzberg is assuming the role of Investment Manager at Katalysen Ventures. In this new role, Emil will be responsible for leading Katalysen’s venture entry and venture exit operations. The former is primarily focused on sourcing & vetting of ventures, while the latter is focused on supporting ventures in exit readiness projects.

E. MANAGEMENT REPORT:

Q3 HIGHLIGHTS:

• The Q3 period was characterized by a complete focus by Katalysen on the needs of the current portfolio.
• On track to meet annual target for new client agreements (target 6-10, forecast 8-9).
• The portfolio of shares and options grew by an estimated 6.7% during the quarter, adjusting for cash invested into the portfolio during the quarter.
• Note that while the third quarter delivered portfolio growth in line with long-term expectations on the Company’s ability to create value, portfolio growth during the first two quarters of the year fell short of expectations, and taken together the Company is expected to fall short of its 30%+ annual portfolio growth target. This is primarily attributable to lower valuations related to the weak market, and delayed exit projects in the portfolio. This does not affect the company’s long-term 30%+ annual growth target.
• Increased internal focus on exits and quick progress with VC fund opportunity gives us reason to be optimistic regarding portfolio exits during 2023 H1.

The Q3 period was characterized by a continued focus by Katalysen on the existing portfolio, made evident by the decision not to sign new venture development agreements during the period. Decisions made during Q1, Q2, and Q3 to make smart reductions to burn rates in portfolio ventures is resulting in extended runways across the portfolio. In line with this focus, a decision was made to halt the India-Europe project with Tetrad Capital Partners, so as to unlock resources for the core business.

Despite this continued focus on the existing portfolio during the Q3 period, Katalysen will reach its previously communicated target of signing 6-10 new client agreements during the year. We have, since the start of the year, signed 7 new client agreements. We expect to sign another 1-2 venture development agreements before end of the year.

The value of the current portfolio of shares and options grew with an estimated 6.7% during the Q3 period, adjusted for cash injected into the portfolio. While the performance during Q3 is in line with long-term expectations on the Company’s ability to create value, portfolio growth during the first two quarters of the year fell short of expectations, and taken together the Company is expected to fall short of its 30%+ annual portfolio growth target. The continued weak market, resulting in lower valuations, in addition to delays in ongoing exit projects, are the primary reasons for this. At the time of writing this, we view it as unlikely that these exit projects will be concluded before the end of the year. Note that while we do not expect Katalysen to meet its growth target for 2022, this does not affect our 30% annual growth target for 2023 and beyond.

To adjust for these delays, and taking into account the current low success rate of public share issues, our Board decided to carry out an opportunistic private placement after the end of Q3, to a small number of highly strategic investors who had previously voiced an interest to deepen their ties to Katalysen. Through this private placement, 7.6MSEK was raised for Katalysen, extending our runway, and preserving Katalysen’s ability to pursue a number of opportunistic follow-on investment opportunities in the portfolio (markets such as these present both challenges and opportunities for venture developers). 

Promisingly, one of the investors participating in the private placement has expressed a very tangible interest in launching a Nordic VC fund during 2023, in partnership with Katalysen. As communicated in the IPO earlier this year, securing dependable channels to co-investors for our portfolio ventures is of outmost strategic importance to Katalysen, and we have high hopes that this project may prove to be an important piece of that puzzle.

Despite the above-mentioned exit delays (or because of these), our internal focus on exits has been significantly strengthened over the quarter (see news regarding Investment Manager). This, in tandem with the quick progress being made with the VC fund opportunity, gives us reason to be optimistic regarding portfolio exits during the first half of 2023. As always, we invite you to reach out to us directly should you have questions or ideas that you would like to share (contact information on page 21).

Yours Sincerely,

Peter and Heiner

This disclosure contains information that Katalysen Ventures AB is obliged to make public pursuant to the EU Market Abuse Regulation (EU nr 596/2014). The information was submitted for publication, through the agency of the contact person, on 15-11-2022 17:30 CET.