G2D has just announced the biggest divestment in its history, placing R$ 117 million in cash at a time when its share trades close to the low.
The holding of shares in startups controlled by GP Investimentos sold its stake in Edgard&Cooper, an American brand of healthy food for pets.
The buyer was General Mills, which did not disclose the value of the transaction.
Carlos Pessoa, G2D’s IR director, told Brazil Journal that the transaction represented a gain of 2.2x in relation to the amount invested by the company, with a compound annual return of around 35% in dollars.
G2D invested in Edgard & Cooper in 2018 through The Craftory, its fund that invests in disruptive consumer brands in Europe and the United States.
“The sale value is equivalent to 52% of G2D’s market value and shows how discounted our role is,” said the executive.
G2D shares, which traded at R$9.86 after the IPO in May 2021, are currently trading at R$1.90, with a market value of just R$220 million. O low was reached last month, when the stock reached R$1.85.
The company calculates that its NAV (net asset value) is R$6.58 today, considering the fair value of the shares it has in around 40 startups in Brazil, Europe and the USA. Before today’s sale, the NAV was R$6.17.
The NAV has fallen a lot in recent years due to the repricing of the entire tech and the growing skepticism of investors with the theses of venture capital. In 2021, G2D calculated its NAV at around R$9.30.
Carlos said that the company marks its assets using the methodology International Private Equity and Venture Capital Valuation (IPEV), which determines that the investment can only be marked by the valuation from the last round until one year after it took place. (After that, the marking is done based on traditional methodologies, such as discounted cash flow and multiple analysis.)
This has caused the company’s asset markings to fall sharply in recent years, in line with the decline of listed technology companies.
“We mark down our assets to be conservative. But today’s sale, for example, was made at a value 57% higher than what we had marked the asset on our balance sheet,” said Carlos.
Today’s divestment came two months after G2D made another asset sale: opengov, which generated a much smaller gain of US$1.5 million, but which also came out at a value higher than the asset’s markup and with a return of 3x capital.
Carlos said that the company should use the R$103 million from today’s sale to pay part of its debts and make new investments.
Soon after its IPO, G2D raised R$77 million in debt to make new contributions, as it had not managed to raise everything it wanted in equity. (Carlos did not specify how much of this debt the company intends to prepay now).
According to him, the idea is to make 2 to 3 contributions this year, following the same rhythm as previous years. G2D made no new investments this year.
Pedro Arbex
