Brazil's Nubank slashes IPO valuation to over $40 billion


Nov 30 (Reuters) – Brazilian digital bank Nu Holdings slashed the targeted price range for its U.S. stock market flotation by about 18% on Tuesday, as a recent global selloff in technology stocks weighs on year-end initial public offerings.

The company, known as Nubank, had earlier aimed for an IPO valuation of more than $50 billion on the back of a record-breaking boom in U.S. capital markets.

But a recent rise in Treasury yields has dampened investor sentiment towards major tech stocks, while the new coronavirus variant Omicron has raised fears of fresh damage from the more than a year-long pandemic.

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In an amended filing with the U.S. securities regulator, Sao Paulo-based Nubank said it now planned to sell about 289.2 million shares priced between $8 and $9 each. At the top end of the range, it will raise $2.6 billion at a valuation of $41.5 billion.

Affiliates of Sequoia Capital, Tiger Global Management, SoftBank Latin America Funds, Dragoneer Investments, TCV, Sands Capital, Morgan Stanley and JPMorgan are expected to anchor the IPO and buy shares worth at least $1.3 billion, Nubank said.

Backed by Warren Buffett’s Berkshire Hathaway Inc (BRKa.N), the company had earlier planned to raise nearly $3 billion by selling shares priced between $10 and $11 apiece.

Even at the lowered target valuation, Nubank would be worth more than Brazil’s largest traditional lender Itau Unibanco Holding SA (ITUB4.SA) which has a market capitalization of $37.5 billion.

The digital bank’s planned stock market float comes on the heels of several big IPOs in 2021, including those of Rivian Automative, Didi Global Inc (DIDI.N) and Coupang Inc and other fintech heavyweights like Robinhood Markets Inc (HOOD.O) and Coinbase Inc (COIN.O).

U.S. IPOs have raised a record haul of $275 billion this year from investors, according to data from Dealogic.

Investors have, however, been wary of backing Latin American fintech companies with questionable business models after Brazilian payments firm StoneCo posted hefty losses in its most recent quarterly results. StoneCo shares have declined more than 80% this year.

Nubank was founded in 2013 by David Velez, a Stanford-educated Colombian, as an issuer of credit cards that charged no annual fee. The bank has since gained over 48 million customers and launched products including checking accounts and loans.

Nubank primarily makes money through fees that are paid by merchants whenever a customer makes a transaction. The company said last month it had managed to turn a profit in the first half of 2021 in its Brazilian operations.

Morgan Stanley, Goldman Sachs, Citigroup and NuInvest are the lead underwriters for Nubank’s offering.

Register now for FREE unlimited access to reuters.comRegisterReporting by Niket Nishant and Noor Zainab Hussain in Bengaluru and Carolina Mandl in Sao Paulo; Editing by Shailesh Kuber and Aditya Soni

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