Business & Economy

Brazil’s Nubank surges in Wall Street debut, becomes LatAm’s largest fintech

By Nora Quintanilla

New York, Dec 9 (EFE).- Brazilian digital bank Nubank enjoyed one of the most successful Wall Street debuts of the year on Thursday, climbing to a market capitalization of $48 billion and positioning itself as Latin America’s most valuable financial technology company.

Nubank opened trading at 1.00 pm at a price of $11.25 per share, 25 percent higher than its $9-per-share initial public offering price on Wednesday night, when the fintech sold 289.15 million shares and raised $2.6 billion.

It then briefly climbed above the $12-per-share mark in early afternoon trading.

A week prior to its Wall Street debut, when fears surrounding the Omicron variant were roiling markets, Nubank lowered its IPO target valuation from around $50 billion to $40 billion.

The fintech said then it trimmed its price range to between $8 and $9 per share “in line with markets at this moment,” although some analysts questioned whether the move was a response to low demand.

But in Thursday’s trading that fintech founded less than a decade ago as a digital alternative to large Latin American banks blew past the valuations of Itau and Bradesco, formerly the region’s two largest financial institutions by market cap.

Although its price fell in late trading and closed at $10.33 per share, Nubank still positioned itself as the third-highest-valued Brazilian company on Wall Street after state oil company Petrobras and mining giant Vale.

Nubank’s CEO, Colombian businessman David Velez, rang the bell that announced the start of trading of the company’s shares on the New York Stock Exchange. In an interview with Efe, he said the fintech’s growth has been “incredibly fast” and gratifying.

The former Silicon Valley venture capitalist’s fintech has been buoyed by the support of heavyweight investors like his ex-employer, Sequoia Capital, and legendary American investor Warren Buffett’s Berkshire Hathaway.

With 48 million customers in Brazil, Colombia and Mexico, the company aims to offer alternatives to consumers and “bancarize the entire population of Latin America,” where some 200 million people lack access to financial services, he said.

Velez said the pandemic has had a positive impact on Nubank, prompting customer segments such as people over the age of 60, who previously had regularly used bank branches, to open digital accounts.

“And they’re not going back,” the CEO said. “That behavioral change that perhaps was forcibly brought about by the pandemic … has become something that, regardless of social strata or age, the customer is embracing.”

Thanks to a larger customer base, Nubank’s revenues nearly doubled to $1 billion in the first nine months of 2021, compared to the previous year, although the company also posted a net loss of $99.1 million during that same period, according to documents provided to securities regulators.

The fintech also posted net losses – of $171.5 million, $92.5 million and $28.6 million, respectively – in 2020, 2019 and 2018.

Velez, however, pointed out that the company is already turning a profit in Brazil and is reinvesting that money in new products and in its Colombian and Mexican operations. The money raised in the IPO also will be used to bolster those latter two markets.

Nubank will make its debut on the Sao Paulo Stock Exchange on Friday. EFE


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