Brazil’s Nubank joins the neobanking IPO race

Brazil’s Nubank joins the neobanking IPO race

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Brazilian challenger bank Nu Pagamentos SA, or ‘Nubank’ – known for its distinct purple credit cards – is reportedly set to raise over $2 billion through its upcoming initial public offering (IPO). When a company launches an IPO, it is listed on the stock exchange, making its shares available for sale to the public from a 3 to 24 month period. Nubank’s IPO is being handled by Morgan Stanley, Goldman Sachs Group Inc., Citigroup Inc. and UBS Group AG. The news comes after co-founder David Velez hinted at the business plans to go public earlier this year.

Nubank entered unicorn startup status in 2018 when it was valued at $1 billion – just four years after the bank’s first transaction was made. Its valuation then shot up to $10.4 billion in 2019 and $30 billion in June this year, when multinational conglomerate holding company owned by Warren Buffet, Berkshire Hathaway Inc. purchased a $500 million stake in the business. Should the bank’s latest valuation surpass the $40 billion mark when it goes public later this year, Nubank will become the second most valuable financial institution in Latin America – with first place in the firm grip of Brazil’s Itau Unibanco Holding SA at $55 million. 

Source: nubank.com.br

Since it was founded in 2013, Nubank has introduced a number of innovative products and services to its 38 million customers including an international Mastercard credit card that boasts zero annuity fees and can be managed completely through a mobile app. Nubank also provides its users with a digital bank account, ‘NuConta’, that allows for transfers and deposits completely free of charge, controlled solely from the user’s smartphone. Nubank Rewards is the bank’s loyalty program that gives customers the opportunity to earn points, which can be redeemed for a range of products and discounts on services, travel and entertainment. In 2019, Nubank announced its first international expansion into Mexico under the subsidiary brand ‘Nu’, and in September 2020 announced plans to launch operations in Colombia. Since the start of 2020, Nubank has closed a number of acquisitions, including software engineering and agile methodologies company Plataformatec, technology service company Cognitect, and investment broker Easynvest

Source: nubank.com.br

As financial institutions recover from the global pandemic, rumours of IPOs have become rife among leading neobanks. German N26 – one of the most valuable non-listed FinTechs in Europe – sparked speculation earlier this year when it hired a new CFO Dr. Jan Kemper. In July, Monzo’s COO Sujata Bhatia indicated in an interview that an IPO could be on the horizon for 2023, as the challenger bank gears towards expansion into the US. Similarly, Revolut hinted at an IPO being the next big step for the London based neobank, as they boast a valuation of £24 billion following an $800m investment led by SoftBank’s Vision Fund and Tiger Global management last month. However, Anne Boden, CEO of Starling Bank recently said that “We’re going to do it in our time,” and “We’re not going to be forced to do it because it’s fashionable at the moment.”

Word of Nubank’s predicted $2 billion raise through IPO has emerged amid a plethora of similar reports in the neobanking space, which is seeing discussions of plans to IPO become not a matter of ‘if’ but ‘when’.

As financial institutions recover from the global pandemic, rumours of IPOs have become rife among leading neobanks.

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