(Bloomberg) — Nu Holdings Ltd., the Brazilian digital bank whose backers include Warren Buffett’s Berkshire Hathaway Inc., raised $2.6 billion in a U.S. initial public offering priced at the top of a marketed range it had earlier lowered.
The company, which does business as Nubank, sold 289 million shares Wednesday for $9 each after offering them for $8 to $9, according to a statement confirming an earlier report by Bloomberg News. Nubank had lowered the proposed range last week after earlier seeking to raise as much as $3.18 billion.
Berkshire bought 10% of the shares in the offering, said a person familiar with the matter who asked not to be identified because it wasn’t public. Berkshire didn’t immediately respond to a request for comment sent to Buffett’s assistant.
At the IPO price, Nubank has a market value of $41 billion based on the outstanding shares listed in its filings with the U.S. Securities and Exchange Commission. Accounting for employee stock options and restricted stock units, the company has a fully diluted value of $44 billion.
Nubank’s IPO makes it the most valuable financial institution in Latin America, surpassing Itau Unibanco Holding SA, with a $38 billion market value.
Sequoia Capital, which invested $1 million in Nubank in 2013 in a seed round, now has a stake that is worth $7.1 billion at the $9 share price, based on the company’s filings. Other top shareholders include DST Global, Tencent and Tiger Global.
Berkshire’s Stake
Berkshire invested in Nubank in June, taking a $500 million stake valuing the company at $30 billion, a person familiar with the matter said at the time.
The offering is being led by Morgan Stanley, Goldman Sachs Group Inc. and Citigroup Inc. The shares are expected to begin trading Thursday on the New York Stock Exchange under the symbol NU. Its Brazilian depositary receipts, known as BDRs, will trade on the Sao Paulo stock exchange under the ticker NUBR33.
The listing adds to the year’s all-time record already set on U.S. exchanges, with at least 469 companies raising a combined total of more than $161 billion, not including blank-check companies, according to data compiled by Bloomberg.
Nubank follows a record wave of Brazilian listings, with almost 50 companies raising more than 65 billion reais ($12 billion) this year. While messy politics and Brazil’s upcoming presidential election have already started undermining the demand for new deals, bankers expect some transactions to move forward in the next couple of months.
Nubank, the world’s biggest standalone digital bank, had more than 48 million customers across Brazil, Mexico and Colombia as of September. It provides easy-to-use financial products that come with relatively low fees.
Expansion Push
The company said it had a $99 million loss on revenue of $1.06 billion for the nine-month period ended Sept. 30. Interest income accounted for $607 million of that revenue, with fees and commissions making up the remainder.
Nubank warned investors to brace for “short-term profit implications” from the firm’s expansion push.
Chief Executive Officer David Velez will own a stake in the company worth about $8.9 billion at the IPO price. His co-founder, Cristina Junqueira, has a stake worth $1.1 billion.
Before creating the startup, Velez spent two years at Sequoia, trying to find an investment in Latin America. Instead he left with an idea of his own.
Velez, who’s Colombian, had a grueling experience opening a bank account in Brazil and enlisted Junqueira, fresh off a stint at Itau’s credit card unit, to help him create an alternative.
Brazil, like much of Latin America, is plagued by expensive financial services that are available to only a limited portion of the population. Century-old banks dominate the market beset by bureaucratic barriers. Still, a high percentage of the region’s 700 million people own mobile phones, making it an attractive target for digital banks.
Velez, whose Class B shares come with 20 votes each compared with one apiece for the Class A shares sold in the IPO, will hold 75% of the company’s voting power after the offering. Junqueira will control 9.3% of the voting power. Neither planned to sell shares in the offering, according to the filings.
(Updates with Berkshire share purchase in third paragraph)
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