Eleving Group has provided an update for investors on Mintos regarding the Group’s performance and future goals considering the current market conditions:
1. Let’s set the scene. What is Eleving Group?
Modestas Sudnius, CEO of Eleving Group: “What once began as a one-brand company focusing predominantly on vehicle financing now has evolved into a global, multi-brand group with several business lines across multiple financing products. After founding the company in 2012, with the goal of filling the gap in the used vehicle financing market in Latvia, we soon saw that we could become a global company. Expanding to all Baltic states within a year since launch, we continued expansion in the following years. Currently, we operate in 15 markets with a client portfolio of more than 500 000 customers worldwide and about €1.115 billion in issued loans. Although we have a start-up culture and FinTech solutions, we provide corporate performance and are carrying out a long-term strategy. We are proud of our proven track record of stability and expertise gained by operating in more than 20 markets – which is probably our “golden formula.” Eleving Group was the very first company to join the Mintos platform, and since 2015 the Group has listed loans from nearly 20 countries with 20 products. It has generated €44.9 million for investors as interest payments. As of today, loans listed by Eleving Group amount to more than 15% of Mintos’ total loan listings.”
2. How is Eleving Group affected by the situation and sentiment felt in global markets, uncertainty caused by rising energy and fuel prices, inflation, and the consequences of a global pandemic?
Modestas: “While we are aware of the situation and uncertainties, we are confident in the strategic steps we have taken to mitigate our exposure to various macroeconomic shocks. Taking the new reality into account, we evaluate additional business development activities more carefully, but we are still maintaining our growth mindset and the course of growth.
We have observed clients being more cautious about new financial commitments, which is good news since it indicates the improvement of financial literacy. One of our priorities is keeping the cost of service for customers at the current level, and we’re glad to see the demand for our products and client credit discipline remaining high across most markets in the Group.
As for mobility habits, it is clear that people are thinking more about the economy and sustainability at times like these. Used vehicles will not disappear from the market. Still, people will start looking at vehicles with smaller or hybrid engines. It will save some money from reduced fuel costs and upkeep. It’s an intelligent approach, and we are ready for this kind of change in mobility.”
3. How good was the last quarter for Eleving Group, and what are the key findings?
Māris Kreics, CFO of Eleving Group: “The first quarter of 2022 showed a substantial increase in all key performance indicators (KPIs). We achieved excellent results despite the strong headwinds caused by the war in Ukraine, increasing inflation, and the consequences of a Covid-19 pandemic in the world economy. Our adjusted revenue went up by 43.5%, reaching €45.4 million, while adjusted EBITDA increased by 27.8%, reaching €17.1 million in Q1 2022. Also, adjusted net profit showed great numbers hitting the €5.9 million mark for the period, outperforming the figures we planned for Q1. The start of the year has been very successful for the company, putting us in a perfect position for the foreseeable future.”
4. How has Eleving Group been affected by the current geopolitical reality in the world, especially in Eastern Europe, where several of the Group's markets are located?
Māris: “The war in Ukraine deeply saddens us as individuals and a company. Two of our markets of operations – Ukraine and Belarus – are directly affected by the war – our strategy in both markets is to decrease portfolio exposure while maintaining an efficient cost structure.
Issuances in both countries have been halted. In March, new early repayment initiatives were implemented in Belarus, which resulted in all-time-high collections. In the same month, a significant drop in collections was observed in Ukraine. However, meaningful improvements were seen in the following month as cash collected in April exceeded March’s figures more than twofold. Additionally, while cross-border payments and currency conversion have been suspended in Ukraine, Belarus operations have focused on liability settlement towards the Group.
We have been focusing on repaying outstanding liabilities in Belarus, especially towards Mintos investors. Our exposure from the Belarus entity on Mintos at the end of February was €9.6 million, while currently (June 2022), it stands at €7.8 million. We have generated more than €0.22 million to investors as interest payments during this period since 24 February.
Overall, our strategic advantage is business diversification. This means that the business risks are distributed across 15 markets in three continents.”
5. What are Eleving Group’s business development and financial goals for this year and the medium term?
Modestas: “We are planning to grow our business geographically by gradually entering new markets and also product-wise by expanding our business in existing markets. We have developed a new way of launching new markets, which minimizes initial risks and maximizes success rate throughout the start-up phase.
Also, we’ve created a well-functioning vertical product cycle that allows us to utilize a vehicle throughout all its value chain – acquiring brand new vehicles and keeping them in our portfolio for 10 years, to be further used for car-sharing, subscription, near-prime vehicle financing, and financing through our traditional products.
In addition, we plan to develop existing products in our markets. We’ll continue the development of a vehicle subscription product recently launched in Latvia and Estonia and explore opportunities to expand it to other markets as well since it has proven its potential in the first months of operations in the Baltics.
Also, a group-level ESG strategy has already been adopted and is being actively implemented. As a Group, we plan to significantly grow the share of zero-emission vehicles in our portfolio. The goal is to have at least 1 000 zero-emission vehicles in our portfolio by 2025.”
6. How does Eleving Group assess its current funding situation?
Māris: “We are delighted with our current diversified funding structure where Mintos is playing a significant role, but at the same time, it is only one of the channels through which we attract funding. Besides Mintos, we have a set of other sources such as bonds issued, bank loans, and borrowings from third parties. As we raised the latest Eurobond (150 million, listed in Frankfurt) in 2021 and refinanced our outstanding bond in Latvia (30 million, listed in Baltics) during the same year, we obtained significantly more favorable conditions than currently available in the capital markets. Additionally, our borrowings maturity profile has now been extended beyond next year, with Latvian unsecured bonds repayable in 2024 and Eurobonds repayable in 2026. Moreover, during the last days of 2021, we have also issued our inaugural subordinated bond in the total amount of €25 million maturing in 2031, which is currently being listed on the Baltic Stock Exchange.
At the same time, we understand that investors on Mintos require an adequate return and liquidity for their investment, so we aim to list our loans at attractive rates from an investor perspective. It is worth noting that all Eleving Group listed loans have a Group Buyback Obligation. With Mintos becoming a regulated investment firm, we expect significantly larger transparency from all the parties involved, which we believe is a very positive sign for the investors. Plus, it should help the platform develop further and protect investors even more.”
About Eleving Group
Eleving Group was founded in 2012 in Latvia and joined the Mintos marketplace in 2015, originally offering loans for investment from Latvia. Since then, it has placed loans on the marketplace from 15 countries in the Baltics and Central, Eastern, and South-Eastern Europe. Operating regions also include the Caucasus and Central Asia, as well as Eastern Africa. To date, the company has issued over €1.115 million in loans and has a net loan portfolio of over €260 million.
Some of the equity investors of Eleving Group and Mintos overlap..