DealmakingM&A / Funding

Nubank files S-1, seeks $50 billion valuation

Nubank, a Warren-Buffett-backed neobank and one of the largest financial technology companies in Brazil, has announced plans to go public, according to an S-1 filed with the American Securities and Exchange Commission and the Comissão de Valores Mobiliários (CVM).

The company’s target price range of $10 to $11 per share would give a market capitalization of $40 billion to $50.6 billion, a valuation higher than Brazil’s largest traditional financial institution Itaú Unibanco, according to the Financial Times

Nubank seeks to raise more than $3 billion from stock market investors in the proposed transaction, which would rank it as the third-largest IPO of the year to date. The company plans to use the US listing as a way to negotiate a program of Brazilian Depositary Receipts, according to TechCrunch.

While Itaú Unibanco may currently have a larger valuation than Nubank, the neobank has made incredible progress when it comes to consumer and business market adoption since its founding in 2013.

It most recently reported 40 million users across Brazil, Mexico and Columbia at the time of its $750 million Series G led by Berkshire Hathaway and Sands Capital in June. That compares to six million in 2018, and makes Nubank the largest digital bank in the world based on volume of customers.

Nubank has raised $2.3 billion in funding through 12 rounds, and although the neobank posted a loss of R$230 million in the past year, it was able to turn a $1.3 million profit in the first quarter of this year.

The company launched its first product in 2014, a no-fee credit card managed by mobile app, and now offers a wide range of financial services including online bank accounts, insurance and loans.

Co-founder and chief executive David Vélez would own around 20% of the company and control 75% of voting rights following the proposed offering and would add Nubank to a growing list of Brazilian companies to join the US stock exchange in recent years. These include payment processor StoneCo and investment brokerage XP, according to Financial Times.

Nubank’s S-1 filing also follows news that Brazilian payment solution provider EBANX will be attempting an IPO in the US. That filing, which seeks a valuation over $10 billion, was followed by EBANX’s acquisition of domestic payment player Juno.

In other recent fintech news, Rocket Mortgage is aiming to expedite mortgage services to local banks and credit unions through a partnership with Salesforce. Financial crime is also soaring, with the UK’s Financial Conduct Authority saying suspicious activity reports have reached record numbers.

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