Brazil-based payment processor StoneCo floated yesterday in a $1.22bn initial public offering alongside a $100m private placement by Ant Financial, the financial services affiliate of e-commerce firm Alibaba.
The company issued 45.8 million common class A shares priced at $24.00 each, above the IPO’s $21 to $23 range. Its shareholders sold a further 4.9 million shares, while Berkshire Hathaway and existing backers Madrone Partners and entities advised by T. Rowe Price agreed to jointly buy 25.9 million shares.
Stone has created a software platform that enables merchants and service providers to electronically accept, make and integrate payments online and offline. It also provides additional services such as sales, customer service and operational support.
The company generated approximately $165m in revenue over the first half of this year, making a $22.7m net profit. It has not revealed details of its earlier funding.
HR Holdings, an entity controlled by Stone chairman André Street and vice-chairman Eduardo Pontes, divested almost $60m of stock in the offering and its percentage of the company’s class B shares was cut from 55.4% to 55.1%, though it holds no class A shares.
Berkshire Hathaway agreed to buy almost 14.2 million shares for a total of $340m, while T. Rowe Price paid $216m for 9 million shares and Madrone bought 2.75 million shares for $66m. The IPO prospectus did not reveal details of their shareholding post-offering.
Madrone held 9.3% of Stone’s class A shares and 12.6% of its class B’s, which would have come out as 5.2% and 13% post-IPO, pre-purchase. The higher proportion of class B’s is due to HR and fellow shareholder Tiger Global Management selling class B shares that were converted to class A’s in the process.
Tiger Global sold $7.7m of class A and B stock and emerged with no class A shares and 7.1% of the company’s class B shares. Actis sold $14.8m of class A shares to come out with 16.4% of Stone’s class A’s and 1.1% of its class B’s, while T. Rowe Price had 12.1% of its class A’s and 1.9% of its class B’s pre-purchase.
Goldman Sachs, JP Morgan Securities and Citigroup Global Markets are global coordinators for the IPO, while Itau BBA USA Securities, Credit Suisse Securities (USA), Morgan Stanley, BofA Merrill Lynch and Banco BTG Pactual joined them as bookrunners.
The underwriters have a 30-day option to buy an additional 7.6 million shares, which would boost the IPO’s size to $1.4bn. Stone’s shares opened at $32 on the Nasdaq Global Market on Thursday and closed at $31.09 on Friday.
