Nubank’s US debut is the latest in a busy year for Latin American firms.
The Warren Buffet-backed Brazilian digital bank Nubank is going public on the New York Stock Exchange with a target valuation of $50 billion, the largest among financial institutions in Latin America.
With the offering of roughly 290 million shares valued between $10 and $11, Nubank will surpass Itaú (the region’s current leading lender) to become the continent’s sixth-largest company overall, behind Mercado Libre, Vale, Petrobras, Walmex, and America Movil. The company will also issue Brazilian Depositary Receipts (BDRs), traded on the São Paulo Stock Exchange at 1/6 of a US ordinary share.
Nubank is the world’s leading standalone digital bank, with 50 million active users in Brazil, Mexico, and Colombia. Data from the company’s public filling shows an average client growth rate of 110% a year since 2018, amounting to over 2 million net new customers per month in the last quarter. “We acquired approximately 80%-90% of our customers organically on average per year since our inception,” the company explains.
On the other hand, Nubank hasn’t managed to near the profitability of its behemoth competitors. In fact, the digital bank is running on a $99.1 million loss in the first nine months of 2021, which according to a public filing is due to “short-term profit implications from our expansion push.”
Nubank’s US debut is the latest in a busy year for Latin American firms. It will be closely watched by the Colombian giant Rappi, which is set to go public in January 2022. “A lot of these companies have cross-border aspirations for growth, and the platform that’s supported by public status at Nasdaq or NYSE is consistent with those ambitions,” says Todd Crider, head of the Latin America practice at Simpson Thacher.
In June 2021, Warren Buffet’s Berkshire Hathaway purchased a $500 million stake in Nubank, which would now be worth $830 million. Sequoia Capital, which bought a $1 million stake in the company in 2013, would now own $8.3 billion worth of shares. Other notorious global investors include the Chinese giant Tencent, DST Global, and Tiger Global.