Nubank raises $2.6 billion in landmark Nasdaq IPO

On December 9, leading Brazilian neobank Nubank sent shockwaves throughout the financial market after raising $2.6 billion in its initial public offering (IPO) at New York-based stock exchange NASDAQ thus becoming Latin America's most valuable bank by market capitalization, with a valuation of $41.5 billion. Trading under the ticket NU, shares opened at $11.25 and stabilized at $9 a piece.   

Founded in 2013 by David Vélez, Edward Wible and Cristina Junqueira, Nubank started off as a fintech aiming to empower people by releasing millions of customers of the bureaucracy and abusive fees which are a common practice of the highly concentrated banking market in Brazil. Since then, Nubank has gained over 48 million customers, become the largest digital bank in the world and launched products such as credit cards, savings account, life insurance, personal loans, mobile payments and solutions for small business and entrepreneurs, amongst others.

Nubank had eight investment rounds and two extensions before its IPO, which gathered top-of-range investors such as Berkshire Hathawhay,  Tencent Holdings, Sequoia Capital and many others.  

Following a turbulent week, which included decreasing 20% of its IPO valuation after facing weak demand by cautious investors that were wary of unprofitable banking fintechs, in addition to gathering anchor investors to acquire at least $1.3 billion shares, Nubank’s IPO success has been closely observed by the market and considered as an indicator of opportunities in the fintechs sector, especially in emerging markets.  

According to the company, the proceeds raised will be injected as working capital, operational expenses, capital expenditures and acquisitions. Currently, Nubank operates not only in Brazil, but also in Mexico and Colômbia, and has branch offices in Germany and in the USA. Morgan Stanley, Goldman Sachs, Citigroup and NuInvest were the lead underwriters for the IPO.  

“We don’t think the banking branch will survive the way it is. It is too costly to serve the majority of users, especially in emerging markets where you have a very high cost of operations, so a lot of that physical infrastructure will probably disappear. Most of the providers of financial services 5-10 years from now will be digital companies that will be focusing on the customer, will have a lot of efficiency, and be decreasing fees and interest rates for everybody.”, stated Mr. Vélez, the bank’s co-founder and CEO.