Brazil’s Nubank goes public on NYSE, a pivotal moment for LatAm business ecosystem

Latin America’s largest neobank and one of the region’s biggest credit card issuers, Nubank made its debut on New York Stock Exchange (NYSE) yesterday, with the goal to keep innovation, growing, developing new products and reaching more clients. Nubank’s IPO represents a pivotal moment for the Latin American business ecosystem and how a new breed of purpose driven entrepreneurs are taking the stage, leading the digitalization of the region and building a more inclusive future.

At the end of November, Nubank slashed its IPO valuation target to roughly $40 billion, as a recent global sell-off in technology stocks weighs on year-end initial public offerings. Backed by Warren Buffett‘s Berkshire Hathaway, the company waw previously valued at US$ 30 billion on its Series G extension. Now, with the stock priced at $9, it would raise $2.6 billion, racing a valuation of $41.5 billion. The stock closed its first day of trading at $10.28.

Nubank’s IPO makes it the most valuable financial institution in Latin America, surpassing Itau Unibanco Holding SA, with a $38 billion market value.

“When Cristina, Ed and I met, we shared common vision: to generate positive impact within our communities. On this #NuDay, I’m so happy to see that our vision has been realized and succeeding thus far, and with a solid foundation to continue our life’s work along this journey for decades to come” said David Velez, Co-founder of Nubank on its LinkedIn account.

The neobank obsessed with customer satisfaction has recently announced the acquisition of the AI startup Olivia. Olivia offers an AI assistant that learns about and predicts individual spending patterns and behaviors, while offering personalized financial recommendations. (IDBLabs, Bloomberg, TheLatamList)

Incode, Clara, and Merama join the Mexican Unicorns Club

The digitalization accelerated by COVID-19 has favored the rise of tech companies in Latin America thanks to the fewer AI based services that are increasingly required. 3 Mexican startups have recently, this week, become the new riders added to the list of Latam unicorns.

Clara, the fintech that started operations 8 months ago, is now the youngest unicorn by announcing on Monday the closing of a Series B financing round equivalent to $70 million, reaching a valuation of $1 billion.

“We are very proud that just eight months after our launch in Mexico, today we are the Latin American startup that has obtained this position the fastest, with this we reaffirm our commitment to contribute to the growth and competitiveness of all companies in the region, to the time that we promote the development of the entrepreneurial ecosystem in Latin America ”, commented Gerry Giacomán Colyer, CEO and co-founder of Clara to Entrepreneur en Español.

Source: Statista

As of November 2021, there were over 26 thousand fintech startups worldwide, of which over 40% were located in the Americas. Specially, more than 440 of these fintech startups have set up shop in Mexico, where bank accounts penetration is low, but internet user penetration continues to grow to new heights.

“We have created an exceptional and person-friendly experience that allows the end customer to have a unique experience when they join a new bank, check into a hotel or are admitted to a hospital. By reinventing these experiences, we are building trust between companies and their customers. ” said Ricardo Amper, founder and CEO of Incode Technologies, an identity verification and authentication platform based on Artificial Intelligence (AI) that raised $ 220 million in its Series B funding round after less than 7 months of completing Series A.

This week also, Merama reached a $1.2 billion valuation in a $60 million financing round led by Advent International and Softbank, bringing to $445 million the total capital raised that combines $345 million of investment and $100 million of debt.

“We want to work together with the platforms, we want to grow and help the brands that are leaders in Latin America, so this capital is going to work for many things, fundamental that we can grow the brands much more because they require marketing, working capital, team, technology, and this is what we are going to invest in with this capital”, Merama CEO Sujay Tyle told Forbes two months ago.

Another outstanding company in the fintech sector has been Kueski, that with its consistent growth recently announced the raising of US$202 million in equity and debt funding. The funding was a Series C and will be used to strengthen its Buy Now, Pay Later (BNPL) presence in Mexico. (TechCrunch, Elceo.com, Statista, Contexto, Forbes)

The Mexican, Quinio, entering ecommerce with $20M seed

A new company is entering the crowded e-commerce aggregator space to acquire and scale high-performing Latin American brands selling on MercadoLibre, Shopify or Amazon.

Quinio, a Mexico-based company, announced today it secured $20 million in a debt-and-equity round that will be used to add more than 30 brands to its portfolio.

Quinio isn’t focused on any certain categories but is going after medium-sized brands that bring in between $100,000 and $20 million in annual revenue. After acquisition, the Quinio team focuses on increasing sales, operations efficiency and optimizing cost structures.

Latin America is one of the fastest growing e-commerce markets in the world, citing a gross merchandise value growth of over 60% in 2020, to $105 billion, which represents double the growth rate initially expected before the global pandemic hit. E-commerce is expected to grow another 30% this year, Juan Gavito said. (TechCrunch)

Source: Statista

Latin American trade will rise 25% in 2021 and expect a 10% in 2022

Latin America and the Caribbean’s international trade will experience a significant rebound in 2021 after the sharp drop recorded last year, but this recovery will be asymmetrical and very heterogenous between the region’s countries, in a context of great uncertainty due to the crisis stemming from the COVID-19 pandemic, the Economic Commission for Latin America and the Caribbean (ECLAC) indicated today in a new annual report.

According to the document, ECLAC projects a 25% increase in the value of regional goods exports for 2021 – after a 10% drop in 2020 – driven by a 17% rise in export prices and an 8% expansion in the volume of shipments. Meanwhile, the value of goods imports is seen increasing by 32%, with a 20% expansion in volume and a 12% rise in prices. In 2022, it estimates that the value of regional exports and imports of goods will grow by 10% and 9%, respectively, in a context of lower regional and global economic growth.

South America is seen experiencing the biggest increase in the value of exports in 2021 (34%) since, given its export specialization, it will particularly benefit from higher commodities prices. A similar situation is seen in the Caribbean, which will benefit from high prices for the oil, gas and bauxite exported by Guyana, Trinidad and Tobago and Jamaica, respectively. The value of Mexican exports (which are mainly manufactured goods) is seen rising 17%, due mainly to greater volume; Central America faces a similar scenario. Meanwhile, the value of imports is seen growing in excess of 25% in all the subregions and Mexico.

The increase in the region’s goods exports in 2021 is due mainly to higher prices for basic products – above all minerals, hydrocarbons and agro-industrial products – more than greater volume. In addition, regional exports of services have still not recovered from the decline suffered as a result of the pandemic. Specifically, the regional dependence on tourism is much greater than the global average, which has meant that the uncertainty surrounding the reopening of this sector negatively affects the prospects of various economies, especially those in the Caribbean, ECLAC warns. In sum, the recovery of regional trade in 2021 shows significant weaknesses. (ECLAC, International trade Outlook 2021)

To keep inflation in check, many Central Banks in Latin America have started to raise interest rates. Monetary Policy rate (Percentage)
Monetary Policy rate (Percentage)

Brazil CB makes 150 bps interest rate hike

As inflation surges, this Wednesday Brazil’s Central Bank hiked its benchmark interest rate by a whopping 150 basis points for the second straight time.

The increase, the seventh straight, was in line with analysts’ expectations. It brought the Selic rate to 9.25 percent, the highest since mid-2017.

The decision was made unanimously by the nine members of the bank’s monetary policy committee, which said in a statement it expected “another adjustment of the same magnitude” when it ends its next meeting, on February 2. That makes Brazil’s current tightening cycle the most aggressive among major economies, as the central bank confronts 12-month inflation in double digits and President Jair Bolsonaro’s vows to boost welfare spending in an election year.

Some economists have warned that looser fiscal policy has backfired on the government by forcing the central bank, whose formal autonomy was written into law this year, to hike rates sharply. Higher borrowing costs contributed to a slight economic contraction in the second and third quarters. (Reuters, Rfi)

Source: TradingEconomics.com, Instituto Brasileiro de Geografia e Estatística (IBGE)

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