São Paulo, Brazil headquartered Nubank is one of the largest fintech companies to go public in 2021.
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The company, which plans to list on Wednesday on both the New York Stock Exchange and the São Paulo Stock Exchange, lowered its target share price from $11 to $9. Based on the new price, it’s slated to raise $2.86 billion via the IPO, which would value the company north of $40 billion per filings with the SEC.
Nubank was last valued at $30 billion in a Series G extension funding led by Berkshire Hathaway, making it the 11th most valuable company on The Crunchbase Unicorn Board, alongside self-driving technology companies Cruise and Waymo, each most recently valued at $30 billion.
Nubank has raised over $2 billion during its life as a private company. Sequoia Capital is its largest institutional investor, and first invested in the seed round in 2013 led by Doug Leone and led the Series A. Co-founder and CEO David Vélez was previously an investor at Sequoia Capital focused on the Latin American market before founding Nubank.
Other listed 5 percent stockholders include DST Global, which first invested at Series D in late 2016, Tiger Global, which led Nubank’s Series B in 2016, and Tencent in an equity and secondary investment in 2018.
Nubank was founded in 2013 in Brazil with a distinctive purple no fee credit card integrated into a mobile first platform. The company has since added banking, investing, lending and insurance for its customers.
Founding and growth
“All three of us saw a massive opportunity, using technology, data and truly thoughtful service to eliminate the complexities and anxieties that customers face everyday dealing with Latin American banks, by creating a truly new experience, not just a digital copy,” they said in Nubank’s IPO prospectus.
The company boasts 48.1 million subscribers with an average of 2.1 million new subscribers per month in the third quarter of 2021. Its customer base is centered in Brazil, Mexico and Colombia. Much of that growth is organic with customers referred by others or consumers signing up directly. Of its banking customers who have been on the platform longer than 12 months, 50 percent hold their primary account with Nubank.
By contrast, Revolut, the neobank out of Europe, boasts 15 million individual customers and 500,000 businesses banking on its platform. Revolut was last valued at $33 billion, in a Series E funding in June 2021 led by the Softbank Vision Fund and Tiger Global holding the 10th spot on the Unicorn Board.
Risks to its business as stated in its F-1A with the SEC signal that the company has historically derived substantial revenue via its credit card business from interchange fees (30 percent) and interest from credit cards (23 percent) in the nine months to September 30, 2021. These fees could be impacted if they were capped by regulators or provisions from the Brazilian “Superindebtedness Law,” which could require “responsible credit and financial education.”
Nubank posted a loss of $99.1 million for the nine months ended September 30, 2021. For the whole of 2020 the company posted losses of $171.5 million.
The company has offices in Brazil, Mexico, Argentina, Colombia and Germany.
Illustration: Dom Guzman
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