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IPO Report: Ex-Silicon Valley venture capitalist takes Brazilian digital bank Nu public at premium

Shares of Brazilian digital bank Nu Holdings Ltd. rose more than 15% in their stock market debut, some eight years after the company was founded by its current CEO and Sequoia Capital veteran David Vélez Osorno.

Nu
NU,
+13.39%
,
also known as Nubank, traded at $10.37 a share in afternoon action on the New York Stock Exchange, above its $9 price. Signs of healthy interest in the company came Wednesday when it priced at the top of its $8-$9 estimated price range.

Nu sold 289.15 million shares in the IPO for proceeds of $2.6 billion with lead underwriters Morgan Stanley, Goldman Sachs, Citigroup and NuInvest. The latter underwriter is the company’s broker dealer in Brazil.

Nu Holdings was launched in 2013 by CEO David Vélez Osorno, 40, who is also founding shareholder and chairman of the company. He previously worked as a partner at Sequoia Capital in charge of the firm’s Latin American investment unit for about two years.

Osorno owns 992 million shares in Nu valued at about $10 billion, according to a filing.

He founded the company after trying to open a bank account in Brazil. “It was like going to prison,” he said in a 2020 interview with The Economist.

Sequoia Capital is a backer of Nu Holdings, with a roughly 23% stake in the company after the IPO. Sequoia managing partner Douglas Mauro Leone sits on Nu’s board.

With about 4.61 billion shares outstanding after the IPO and an open market price of $10.70 a share on Thursday afternoon, Nu Holdings has a market cap of about $49 billion. That’s about 39 times its revenue of $1.265 billion for the 12 months ending Sept. 30.

Nu posted a loss of $99.1 million for the nine months ending Sept. 30, and a loss of $171.5 million in 2020.

While it has not yet generated a profit, Nu has grown quickly. As of Sept. 30, it counted 48.1 million customers, up about nine times from 5.2 million as of Sept. 30, 2018.

In the three months ending Sept. 30, the company added more than 2 million net new customers in Brazil, Mexico and Columbia.

Tomi Kilgore and Clive McKeef contributed to this report.

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