Latin American IPOs Surged On The Back of Tech Listings

Latin American issuers recorded surging IPO volumes in 2021, in line with global trends. There were 57 new issues with Latin American companies worth $18.7 billion. This figure represents a 73% increase in volume compared to 2020 and a 75% increase in value.

December’s dual listing of Nu Holdings in the US and Brazil took its place as the largest IPO of a Latin American company in 2021, raising $2.6 billion. The technology-driven financial services company offers a digital banking platform in Brazil, Colombia and Mexico, and has strong brand recognition throughout the Latin American region.

The second largest IPO in 2021 was the Brazilian energy business, Raizen, which raised $1.3 billion. Brazil’s economy is still heavily dependent on the oil and gas sector, and Razien was well placed to have a joint venture between oil major Shell, and Brazilian energy and logistic company Cosan (a specialist in biofuels). As the world looks to embracing renewable energy sources, the transition to clean energy is likely to be a common IPO theme in the years ahead.

Source: White & Case

Finally, the third highest IPO was Fibra EXI, which is a Mexican company focused on transportation infrastructure. Fibra EXI raised $1.1 billion and is well placed to benefit as Mexico invests heavily in infrastructure as part of its plan to support the economy post pandemic. [1]

Migrante Steps On The Gas of Vehicle Leasing for Gig Workers in LATAM

Latin America struggles to offer reliable transportation to gig workers. Migrante, a Chile-based startup acts as a lending company and e-commerce service in order to provide durable foods such as cars, motorcycles and mobile phones.

Founded in Venezuela by Ignacio Canals, Diego Fleischmann and Benjamin Izikson, the founders saw the lack of financial access to the population leading to high levels of emigration.

Migrante developed secured loans for products that enable borrowers to improve their income by providing motorcycles,, cars and trucks which are brand new. Migrante’s competitors provide used vehicles only.

The lending company is paired with their online market place that has embedded financial tools which are designed to control the entire customer journey. As a result, it helps plug a financial gap that many Latin American’s face when making large purchases.

Migrante raised $30 million in Series A funding and $80 million in a debt facility and is now moving into Colombia and Mexico. [2]

Dollar’s Strength Defied in Latin America

The US dollar has not posted big gains in this year in Latin America. Currencies from Brazil to Uruguay have defied the dollar’s broad strengthening. The Brazilian real raised to more than 17% against the dollar, making it the world’s top performer for almost three months in 2022. The Chilean and Uruguayan pesos are up around 9.5% and 7.4% and Mexico’s up 2.4%.

To put this into perspective, the US dollar is higher this year, against three quarters of the major currencies, as tracked by The Wall Street Journal. The run up in commodity prices have been a source of strength for emerging markets in 2022. This has benefited economies which are heavily reliant on raw material exports, whilst helping emerging market assets recover after the pandemic.

Emerging markets and Latin America in particular, have a history of high inflation but the response from central banks has varied. Some have raised rates as soon as prices start to climb, while others have allowed inflation to bubble because a weak currency helped exporters and boosted nominal growth. [3]

Source: Tullet Prebon

Colombian Real Estate Startups Want to Take Over Latin America

There are now 65 real estate startup companies in Colombia, the majority born in the last three years. La Haus and Habi are two Colombian companies which are worth special mention. La Haus raised more than $158 million and Habi raised a $100 million round which was led by Softbank.

Both companies have international ambitions. La Haus focuses on selling brand-new homes and lets customers invest in real estate online, pitching in on a fraction of a property. Whereas Habi specializes in buying, renovating, and reselling used apartments and touts an AI-based tool that allows anyone to know the estimated price of a property.

Habi and La Haus bring solutions to the problems faced by most Latin American countries. Even their competitors welcome their arrival. “This is something very positive for the Mexican proptech ecosystem,” says Juan Carlos de Urzaiz, founder of Bimo, a startup that connects property owners and renters. “It opens new options for the final user in a market that is still very much stuck in the status quo.” [4]

Coinbase Nears Deal to Buy Brazil Crypto Unicorn 2TM

Coinbase Global Inc. (the US cryptocurrency exchange) is set to close the acquisition of 2TM, a Brazilian holding that controls Latin America’s largest crypto brokerage, Mercado Bitcoin by the end of April.

Coinbase is pushing to broaden operations in an increasingly competitive market. Binance Holding Ltd is a major rival of Coinbase and it shares similar ambitions. Binance is looking for acquisitions in Brazil as the country’s cryptocurrency market is expected to reach $25.4 billion.

2TM (Brazil’s crypto unicorn) would give Coinbase the leverage needed to secure a market leader position in Latin America. Japan’s SoftBank Group Corp valued the holding behind Mercado Bitcoin, Meubank, MB Digital Assets, Bitrust, Blockchain Academy e MezaPro  at roughly $2.2 billion in the latest Series B funding round. This acquisition will allow 2TM to speed up growth in Latin America by expanding into Chile, Colombia, Mexico and Argentina as it purchases several companies in Brazil. [5]

Selected countries around 1,000 respondents per country surveyed in 2019 Source: Statista Global Consumer Survey

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