Nubank has set a target valuation of $50 billion in its proposed initial public offering in New York, as the lossmaking digital lender looks to join the ranks of Latin America’s biggest listed companies.
A regulatory filing reveals the Brazilian FinTech is aiming to raise more than $3 billion from stock market investors, potentially ranking as the third-largest US IPO of the year so far.
The target price range of $10 to $11 per share would give a market capitalisation of between $46 billion and $50.6 billion if achieved, higher than that of Brazil’s largest traditional lender, Itaú Unibanco.
Founded in 2013, Nubank started out as an issuer of zero-fee credit cards managed by a smartphone app and has since moved into savings accounts, loans and insurance.
With operations in Mexico and Colombia, the São Paulo-based group has 48 million users in a region where many people have long been underserved by mainstream financial providers.
The company is one of a number of disruptive tech start-ups that are challenging the glacial banking sector in Brazil, where a handful of established players have faced criticism for charging fees for basic services.
A successful float would represent another milestone for Brazil’s booming start-up scene. Nubank wants to join payment processor StoneCo and investment brokerage XP, which have both listed in the US in recent years.
While the preliminary prospectus submitted to the Securities and Exchange Commission showed Nubank’s revenues doubled to $1.06 billion in the first nine months of 2021, its net losses widened to $99.1 million in the same period compared to $64.4 million a year earlier. The company recently said it turned a half-year profit in its homeland.
The bulk of Nubank’s income is from interchange fees charged to vendors when a client pays for a transaction and interest levied on credit card balances. But it is now diversifying into other areas such as investments.