Nu Holdings, the Brazil-based owner of neobank Nubank that counts internet company Tencent and conglomerate Berkshire Hathaway as investors, secured $2.6bn today in an initial public offering priced at the top of its range.
The company issued 289 million shares on the New York Stock Exchange at $9 apiece, with Berkshire acquiring 10% of them, a source privy to the matter told Bloomberg. It is also issuing depositary receipts on São Paulo’s B3 stock exchange in a concurrent offering.
Nu had initially intended to raise as much as $3.18bn before decreasing its range last week from $10 to $11 per share to between $8 and $9.
Founded in 2013, Nubank has built a digital banking app that provides services including bank accounts as well as debit and credit cards with competitive fees. It is the largest independent digital bank in the world, with more than 48 million users across Brazil, Mexico and Colombia.
The listing comes at a time when Brazil’s IPO activities have decreased significantly, with no companies having gone public on São Paulo’s B3 stock exchange since September, Bloomberg reported this week.
Bankers and analysts told Bloomberg the lack of domestic listings – which could number as few as 10 next year – may be due to a political climate linked to Brazil’s next presidential election, in October 2022, along with the country’s fiscal restraint and this year’s local stock market rout.
Nubank’s market capitalisation now stands at $41bn, reportedly making it the most valuable financial services provider in Latin America, outstripping the likes of traditional banks such as Banco Itaú, which has a $38bn valuation.
Berkshire provided $500m to lead the company’s $750m series G extension round in June this year, valuing it at $30bn. Tencent took part in the $400m first close in mid-2019 after investing $180m in the business the year before.
Brazil hosts additional challenger banks including C6 Bank, which had raised $252m in December 2020 at a $2.1bn valuation before financial services group JPMorgan Chase acquired a 40% stake six months later for an undisclosed amount.
Another digital banking service, Neon Pagamentosm had most recently closed a $300m series C round in September 2020 backed by PayPal Ventures, a vehicle for digital payment processor PayPal, and Propel Venture Partners, the venture capital firm formed by financial services provider BBVA.
Nu Holdings’ stock consists of 1.15 billion class B shares held by its executives and approximately 3.45 billion class A shares owned by its investors. Tencent has 8.1% of the class A shares post-IPO, down from 8.9%, while Sequoia Capital 22.9%, DST Global 12% and Tiger Global Management 7.2%.
Morgan Stanley, Goldman Sachs, Citigroup Global Markets and Nu Invest Corretora de Valores are the lead underwriters for the IPO. The underwriters have a 30-day option to buy nearly 28.6 million additional shares, potentially adding $257m to the offering.
David Vélez, co-founder and CEO of Nubank, said in a blog post: “As we move towards becoming a publicly-traded company, we reaffirm our commitment to always optimising for the long term – even if this stance sometimes brings implications for short-term profitability.
“To mark this important step for Nu as a publicly-listed company, we have launched the NuSócios (NuPartners) scheme and have invited millions of our Brazilian customers to accept a Nu BDR (Brazilian depositary receipts) as a token of our deepest gratitude.
“With this ‘little piece’ of Nu, our customers will be our partners, our associates and our investors. We hope this will help further strengthen our relationships, and we can share part of the value we create together along the way.” (Translated from Portuguese by Global Corporate Venturing)
Image courtesy of Nubank.
