Nubank was founded in 2013 and began its business by offering credit cards without annual fees.
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Shares of Nubank, the Brazilian digital lender backed by Warren Buffett’s Berkshire Hathaway, jumped by nearly 15% in its first day as a public company, while cloud software provider HashiCorp rose more than 6%.
The two firms are the last traditional IPOs this week. Two other companies, Samsara and Fresh Vine Wine, are currently expected to open for trading next week. December is typically a slow time for new issues as the IPO market prepares to shut down for the holidays.
Nubank’s (ticker: NU) stock kicked off Thursday at $11.25, peaked at $12.24 and closed at $10.33, up $1.33 from the offer price.
Nubank collected $2.6 billion via its IPO. The fintech sold 289.15 million shares at $9 each late Wednesday, the top of its $8 to $9 price range. This is down from a prior range of $10 to $11. Morgan Stanley, Goldman Sachs , Citigroup Global Markets and Nu Invest Corretora de Valores are underwriters on the deal.
At $10.33, Nubank’s valuation is $47.6 billion.
David Vélez, Nubank’s founder and CEO, said the company is using the IPO to bring in new customers while strengthening its brand. Nubank shares began trading Thursday on both the New York Stock Exchange and the São Paulo Stock Exchange. The fintech is offering 7.5 million Brazilian depositary receipts, or BDRS, to its customers in Brazil, Vélez said. They will receive the stock once the 12 month lockup expires, a spokesman said.
“One of the main reasons we wanted to do the IPO was to bring in customer support…A dual listing in the U.S. and Brazil was the right answer for us,” said Vélez who spoke to Barron’s from the NYSE, where Nubank rang the opening bell.
Latin America represents an opportunity for fintechs because the banking sector there has long suffered from a lack of competition, Vélez said. The five largest banks in each of Brazil, Mexico and Colombia control between 70% and 85% of all loans, deposits and overall banking revenue, according to the prospectsus for Nubank’s IPO.
“We still have over 250 million people in Latin America that have no access to banking. They’re literally putting cash under their mattress,” Vélez said.
Vélez, a graduate of Stanford’s business schoook, has personally experienced the complexities of the Brazil banking system. He was born in Colombia but moved to Brazil in 2012, where he said he was treated with “a lot of distrust” when he tried to open a bank account. He said he had to leave his cell phone in a locker, and then had to speak to someone who was not interested in helping him.
“It was almost like going into the security line in an airport,” he said. When he spoke to other Brazilians about his experience, they agreed it was bad, but said “there’s nothing you can do to challenge these big banks,” he said.
Nubank, whose operational headquarters are in São Paulo, is challenging the big banks and is now one of the most valuable fintechs in Latin America.
Founded in 2013, Nubank started out issuing credit cards with no annual fees. It now also offers debit cards, bank accounts, loans, and life insurance. Nubank, which doesn’t have any physical branches, describes itself as one of the largest digital-banking platforms, with 48.1 million customers across Brazil, Mexico, and Colombia as of Sept. 30. More than 70% of its customers are under 40, and about 28% are Brazilians 15 years or older, the prospectus said.
Nubank has a 10% market share in credit cards and 1% in personal lending in Brazil, he said. That’s up from five to six years ago, when it had one credit card. “We’re working to expand those offerings,” Vélez said.
Part of Nubank’s IPO proceeds will be used for acquisitions, he said. The fintech also plans to add technical talent like engineers or data scientists, Vélez said.
Earlier this year, Buffett’s Berkshire Hathaway invested $500 million in Nubank, then valuing the fintech at $30 billion. “It was a strong validation of our business and strategy,” Vélez said.
HashiCorp ( HCP
) also began trading. The stock opened at $81.16, hit a high of $89.50, and ended at $85.19, up $5.19 from its IPO price.
HashiCorp raised $1.22 billion late Wednesday, selling 15.3 million shares at $80 each, above its $68 to $72 price range. Morgan Stanley, Goldman Sachs and JP Morgan are lead underwriters on the deal.
At $85.19, HashiCorp’s valuation is at $15.2 billion.
HashiCorp makes multi-cloud infrastructure automation products that help companies accelerate their time to market, reduce their cost of operations, as well as improve their security and governance of complex infrastructure deployments, according to a prospectus. It had 2,392 customers as of Oct. 31, including Roblox (RBLX), Bank of America (BAC), Progressive (PGR), and Stripe.
Write to Luisa Beltran at [email protected]
