Nubank reduces IPO value to up to US$41.5 billion

Nubank reduced this Tuesday (30) the estimated price range of its initial public offering of shares (IPO), cutting the intended valuation by almost US$ 10 billion (R$ 56.1 billion) to up to US$ 41 .5 billion (R$232.8 billion).

The company will sell around 289.2 million shares for between US$ 8 (R$ 44) and US$ 9 (R$ 50) per share. The company will raise US$2.6 billion (R$14.5 billion) considering the top of the estimated range.

Nubank previously intended to raise nearly $3 billion (BRL 16.8 billion) at a valuation of more than 50 billion by selling shares for between $10 (BRL 56) and $11 (BRL 61) the paper.

​Morgan Stanley, Goldman Sachs, Citigroup and NuInvest are advising the IPO.

The review comes in a global environment of fierce competition and rising expenses to expand the operation that has put heavy pressure on fintech stocks on the stock exchanges over the past few weeks.

In view of the alternatives already available and the challenging scenario ahead, market analysts have taken a cautious view in relation to the digital bank’s offer.

Danielle Lopes, partner and analyst at Nord Research, has recommended investors not to participate in Nubank’s offer. The expected value for the shares, in the expert’s assessment, does not compensate for the investment, given the opportunities of comparable peers in the sector.

“The price of Nubank’s IPO has been quite salty due to the lack of profit growth. We have a generation of new banks on the stock exchange with very strong growth, proven execution capacity and low (multiple) prices,” says the report expert.

She points out BTG Pactual and XP Investimentos as her preferences in the financial segment, companies with an average growth of 50% a year and having registered profits of US$ 1 billion (R$ 5.6 billion) and US$ 600 million (R$ 3, 36 billion), respectively, in the last 12 months.

Nubank already reported a loss of US$ 99.1 million (R$ 556 million) in 2021, until September.

“The BTG and XP duo has the best of both worlds: fintech growth and bank ROE. Their prices are low and high growth, with proven execution capacity. It’s not what we see at Nubank (yet),” says Danielle.

In the same vein, Carlos Macedo, bank analyst at Ohmresearch, believes that Nubank’s valuation at the levels indicated recently is not reasonable, especially taking into account the existing alternatives that are already on the market.

“To justify the suggested values, the multiples would have to be much higher than almost any comparable company or future expectations would have to be much stronger than projected (or a combination of the two),” says Macedo.

The expert points out, however, that recent rounds of financing successfully completed by the company, with the participation of major investors (such as Berkshire Hathaway), indicate that there is a market for the type of asset that Nubank represents at a trading multiple quite tall. “The IPO process should create a new paradigm for fintech public offerings.”