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NU Holdings (NU) IPO: Brazilian bank floats to boost capital

By  Yoke Wong

Edited by Vanessa Kintu

18:38, 3 December 2021

Smartphone with NU Holdings on the screen
NU Holdings is a Brazilian digital banking platform – Photo: Shutterstock

Brazilian digital banking platform NU Holdings is going public in the US in December to raise $2.6bn in order to increase its capitalisation and financial flexibility. The company provides digital banking services in Brazil, Mexico and Colombia. With 48.1 million customers, it claims to be one of the world’s largest digital banking platforms.

NU Holdings IPO: what you need to know

NU Holdings has filed for an initial public offering (IPO) on the New York Stock Exchange (NYSE). The company will be listed under the ticker symbol NU.

The NU Holdings IPO is scheduled for 8 December. The digital bank will offer 289.2 million newly issued Class A ordinary shares, including those in the form of Brazilian Depositary Receipts (BDRs). Each BDRs represent 1/6th of Class A ordinary shares.

Each Class A ordinary share will be entitled to one vote, whereas the Class B ordinary shares, which are not being sold in this offering, will be entitled to 20 votes a share. 

Each NU Holdings (NU) share will be offered in the range of $8 to $9, which could raise the company between $2.3bn to $2.6bn. If the underwriters exercise their over-allotment option to purchase the 28.6 million shares at the top-end of the range, the IPO could raise up to $2.8bn. NU Holdings has reduced its IPO range by 22.7% from the previous target of $11 a share, the US Securities and Exchange Commission (SEC) filing on 1 November showed.

“I favour the firm’s digital-first approach and its revenue growth figures are extraordinary, indicating that it is doing something very right. Additionally, while it has continuing operating losses, those losses are starting to narrow somewhat so far in 2021,” said analyst Donovan Jones on Seeking Alpha. “While the IPO isn’t cheap, given the firm's growth trajectory, reduced operating losses and apparent Berkshire backing, it is worth a close look.”

Use of proceeds

According to NU Holdings’ SEC filing, the principal purposes of this global offering is to increase the company’s capitalisation and financial flexibility, create a public market for its Class A ordinary shares and BDRs, and enable access to the public equity markets for the shareholders.

The company intends to use the net proceeds from the IPO for general corporate purposes, including working capital, operating expenses, and capital expenditures. It may use a portion of the net proceeds to acquire or invest in businesses, products, services or technologies.

NU Holdings is also offering BDRs concurrently in Brazil, and pending on the public sales outcome, this could reduce the number of Class A shares in the international offering in the US.

NU Holdings said in its preliminary prospectus:

“The closing of this international offering is not conditioned upon the closing of the concurrent Brazilian offering, but the closing of the concurrent Brazilian offering will be conditioned upon the closing of this international offering.”

NU Holdings valuation is expected at between $37.1bn and $41.7bn, if the outstanding 4,637,255,888 shares (including its underwriters’ option) were sold at its targeted range.

Upon completion of this offering, and in the event that the underwriters do not exercise their over-allotment option, NU Holdings’ founding shareholder and CEO, David Vélez Osorno, will own 75% of the voting power of issued share capital. This would result in NU Holdings being classed as a “controlled company”.

Under the NYSE governance standards, a company with more than 50% of the voting power held by an individual, group or another company, may elect not to comply with certain corporate governance standards.

Ahead of the NU Holdings IPO date, let’s look at NU Holdings’s IPO news and analyse the company’s business model, revenue, growth strategy and risk factors to help you navigate the launch.

NU Holdings’ business model overview

NU Holdings was first launched in 2014 as a non-traditional digital financial service provider in Brazil, where the market was dominated by traditional banks.

NU estimates the market value of the financial services market in Latin America could reach approximately $1trn in 2021, including the opportunity to provide services to approximately 650 million people in the region. Citing data from the World Bank, NU believes many “are underbanked and deeply unsatisfied with their legacy bank relationships, or completely unbanked”.


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In 2014, the company launched its first product, the NU Credit Card, a purple Mastercard-branded credit card in Brazil. The NU Credit Card was the first completely digital-orientated financial product in Brazil, and it did not have any annual fees. This product provided access to a much broader spectrum of customers – from the more affluent to those just starting out – in Brazil.

Fast forward to 2021, NH Holdings has expanded its financial services to debit card, loan, savings account, business account, investment product, mobile payments, integrated shopping solution and insurance.  

The digital bank operates its business based on four core principles, as stated in the SEC report:

1. A highly curated customer-centric culture 
2. The prioritisation of human-centric design across all its mobile-apps, products, services and interactions to create extraordinary customer experiences
3. The development of advanced proprietary technologies
4. The utilisation and optimisation of data science and powerful proprietary models

With 48.1 million customers, including 1.1 million small and medium enterprises (SMEs) across Brazil, Mexico and Colombia, as of 30 September 2021, NU Holdings claimed it “is one of the world’s largest digital banking platforms, and one of the leading technology companies in the world”. 

The digital-centric nature of NU Holdings is particularly appealing to the younger population in Latin America, where smartphone usage is widespread. According to  internal company research and analysis by Oliver Wyman, NU Holdings said it serves a larger proportion of younger consumers than digital banks and incumbent banks. See the comparison below.

As of 30 September 2021, more than half of NU Holdings’ customers were under 35 years old and 81% of existing customers under 45. The percentage of younger customers at NU Holdings was significantly above those of incumbent banks.

NU believes that its young customer base provides the company “with significant opportunity to grow with its customers who are in the early stages of their financial journeys”.

For example, the bank has cited that the younger customers (20 to 24 years old) are expected to grow their real income by about 70% over the next ten years – based on a comparison of NU’s younger customers’ income to the income reported by customers who are between 30 to 34 years old.

Besides banking services, NU plans to develop its e-commerce marketplace. The company already white labels partners providing financial solutions such as insurance (Chubb), mobile phone top ups (telcos), and foreign remittances (Remessa Online), all under the NU brand. “Over time we plan to provide additional services to our customers beyond financial products, such as online shopping,” said NU Holdings.

NU Holdings revenue jumps in 2021, loss narrows

NU Holdings’ revenue nearly doubled in the first nine months this year to $1.062bn, compared with $534.6m during the same period in 2020. 

The digital bank said 80% of the total revenue was derived from Brazil ($845.8m), compared to Mexico ($13m) and Colombia ($0.2m), respectively. 

Although the company remained in loss, they narrowed by 2.9% year-on-year.

Risk factors for potential investors to consider

According to NU Holdings’ filing, investing in its Class A ordinary shares or BDRS involves a high degree of risk. The digital bank listed some of the following risk factors relating to its business and industry:

- Failure to maintain, protect and enhance the NU brand and image, including through effective marketing strategies
- Failure to successfully implement and improve risk management policies, procedures and methods, would materially and adversely affect the business, results of operations and financial condition 
- NU’s international expansion efforts may not be successful or may subject our business to increased risks
- Any failure of NU’s information technology systems, which the digital bank is highly dependent on, would disrupt its business and impair its ability to provide services and products effectively to customers
- Disruption in the operation of data centers operated by third parties and third-party Internet hosting providers and cloud computing platforms would adversely affect Nu’s business
- Negative publicity about NU (including our directors or employees) or our industry
- The credit quality of NU’s loan portfolio may deteriorate and its ECL allowance could be insufficient to cover losses
- The COVID-19 pandemic has materially impacted, and is expected to continue to materially impact NU’s business in unpredictable ways.

When considering whether to invest in the company’s stock, you should always do your own research to gauge the outlook for the asset and consider relevant market conditions.


What is the initial public offering value?

The initial public offering value is between $8 to $9 a share.

When will NU Holdings go public?

NU Holdings will go public on the NYSE on 8 December 2021.

Read more: Tech IPOs to watch in 2022: Will the IPO boom continue?

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