Ant Financial, the financial services affiliate of e-commerce group Alibaba, agreed to invest $100m through a private placement in Brazil-based fintech company Stone Co in its upcoming initial public offering. The transaction could reach $1.1bn. StoneCo set a price range of $21 to $23 per share and plans to issue 45.8 million class A common shares on the Nasdaq Global Select Market. Its existing investors, most of whom remained unrevealed, are expected to divest an additional 1.9 million shares.
Founded in 2012, StoneCo has developed a cloud-based technology which enables merchants to accept electronic payments. With more than 200,000 active clients in online and brick-and-mortar retailers. StoneCo nearly doubled its revenue to $165m and registered a R$87.7m ($22.7m) profit during the first half of 2018.
Another China-based corporate venture, internet group Tencent, committed $180m in Nu Pagamentos, the Brazil-based operator of digital bank Nubank. The round reportedly valued the company at roughly $4bn. The transaction included $90m of new shares being issued to Tencent and $90m of secondary share purchases from existing shareholders. However, the company did not disclose the identity of the sellers.
Founded in 2013, Nubank has developed and offer a no-charge credit card, which it claims to have been issued to some 5 million people so far. More than 2.5 million customers have opened digital accounts on Nubank’s platform, which has already received regulatory approval to begin issuing loans. According to TechCrunch, the company’s co-founder and CEO David Velez said Nubank hopes to learn from Tencent’s financial activities in China.
It was not only China-based corporate players that were attracted to Brazil’s fintech ecosystem. US-based credit card operator Visa invested an undisclosed amount in digital payments processing technology platform Conductor. Founded in 1997, Conductor has developed a proprietary digital processing platform, which it claims to serve over 100 clients and 69 million end customer payment accounts. The platform is connected to over 135 thousand points of sales in Brazil.
These three transactions come to show the strength and potential of the fintech ecosystem in the emerging economy of Brazil. Traditionally, most fintech enterprises that have drawn the attention of corporates have come primarily from North America, East Asia and Europe, as the historical bar chart from GCV Analytics above shows. Brazil and South America appear to be taking their place on the CVC worldmap with 8 rounds reported by us so far in 2018. Most notably, earlier this year, Brazil-based digital bank operator Neon received $22m in a series A round featuring Propel Venture Partners, the venture capital firm funded by financial services firm BBVA. GCV recently hosted the second edition of its Corporate Venture in Brasil conference in Sao Paulo alongside the Brazilian Trade and Investment Promotion Agency – Apex-Brasil.