Brazilian Broker XP Could Raise up to $2.1 Billion in NASDAQ IPO

XP had set a range last month of $22 and $25 per share, and at the midpoint it would be

XP Inc., Brazil’s largest stockbroker, expects to raise about $1.5 billion to as much as $2.1 billion on Nasdaq in what could be the biggest initial public offering for a Brazilian company.

The company plans to price its public offering at around the midpoint of its expected price range. XP had set a range last month of $22 and $25 per share, and at the midpoint, it would be valued at about $14 billion.

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According to its IPO’s preliminary prospectus, XP, which is based in Sao Paulo and incorporated in the Cayman Islands, wants “to invest in new financial services verticals that we plan to enter or have recently entered into, such as digital banking, payments and insurance; to fund potential future acquisition opportunities.”

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One of the biggest IPOs in brokerage history

Brazil’s largest bank Itaú Unibanco paid $1.9 billion in 2017 to buy a 49.9 percent stake in XP Investimentos SA, along with options to acquire full control in the future. However, the lender said it doesn’t plan to divest any of its holdings. Instead, General Atlantic and Dynamo VC Administradora de Recursos Ltda., which hold a combined 20%, as well as XP managing partners, who own about 30%, could sell up to 72.5 million class A shares.

XP had a total revenue of $820 million in the first nine months through September 2019, while its net income was reported at $164.90 million. Further, according to its filing, it has more than 1.5 million clients and $84 billion in assets under custody.

Last year, some bankers had floated a potential $15 billion valuation for the company. However, the volatility in the stock market makes it harder for banks to gauge where they should price the offering even for a company as big as XP.

Even so, XP IPO would be one of the biggest in Brazilian brokerage history, overshadowed only by those of Banco BTG Pactual’s $14.5 billion capitalizations.

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