Five Brazilian fintechs to watch

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Five Brazilian fintechs to watch

Nubank (Digital banking)

Nubank is a digital bank providing services in Latin America, principally Brazil. It has a growing suite of financial services for individuals and small and medium-sized enterprises (SMEs), including payments services (eg cards, QR code-based and PIX instant payment network), saving products, investments, lending and insurance.

As of December 2021, the company had 53.9mn customers; monthly active users accounted for 76% of this number. Nubank has been able to acquire customers at a low cost; at an average of US$5.4 per customer in 2021. The bank’s revenue grew by 130% yoy to US$1,698mn in 2021, from US$737mn in 2020.

Nubank went on to IPO in December 2021, with its shares rising 15% on their first day of trading, giving the digital bank a market capitalisation of cUS$50bn. However, this has since collapsed to US$21bn. The bank reported a net loss of US$45mn in Q1 22 (down from US$54mn in the previous quarter), which dampened investor sentiment. Other factors driving down the share price recently include rising inflation, higher interest rates, elevated geopolitical risks and the risk of an economic slowdown.

PagSeguro (Payments)

PagSeguro, launched in 2006, is a market-leading Brazilian online/mobile payment-based e-commerce service. It is a payments facilitator for entrepreneurs, sellers and buyers; any person or entity can create an account on the platform through which they can receive and make payments easily and safely. PagSeguro supports various payment options, such as credit cards, online debits, bank slips, deposit accounts and transfers between PagSeguro accounts.

It belongs to Universo Online (UOL) group, the largest internet portal in Brazil (as per Ibope Nielsen Online). The company also has a digital banking arm, PagBank, which offers its clients access to products such as third-party investment funds, marketplaces and home insurance. It has also acquired a minority stake in Boletoflex, an online Buy Now Pay Later specialist.

In 2021, the company’s consolidated TPV grew by 97% to BRL456bn (US$85bn) from BRL232bn (US$43bn) in 2020, while the number of active merchants was at 7.7mn (up 9% yoy). PagSeguro registered revenue of BRL10,449mn (US$1,938mn), up 53% compared with 2020. Meanwhile, net income clocked in at BRL1,166mn (US$216mn), down 10% yoy.

Like many other payments fintechs, PagSeguro’s shares have suffered in recent months (down 61% ytd).

Creditas (Lending)

Creditas is a digital lending platform founded in 2012. The firm offers loans secured against property or vehicle collateral, and payroll loans. Creditas Auto provides vehicle financing, in addition to other services involving buying, selling or exchanging the vehicle and insurance. Creditas Homes disburses loans for property renovation and sale.

In January 2022, the company closed a US$260mn Series F round taking its valuation to US$4.8bn from US$1.75bn at its previous fundraising (December 2020). In Q3 21, Creditas registered US$46.8mn revenue, up 233% from US$14mn in Q3 20. As of Q3 21, the credit portfolio clocked in at US$532mn, up from US$189.3mn in Q3 20.

RecargaPay (Payments)

RecargaPay is a mobile payments fintech launched in 2010. The company offers a wide range of payment solutions, including bill payments, mobile recharges, transport card recharges, gift cards, money transfer services (via QR code, phone or email), etc. It also offers different payment methods to the users for conveniences such as credit card, debit card, bank transfer, boleto or deposit.

In February 2021, the company raised US$70mn in a Series C round to expand its financial service offerings to small businesses and consumers, including further development of its popular subscription program Prime+.

RecargaPay does not disclose its financial results. However, in September 2021, the company’s founder reported that it operates with positive EBITDA and an annualised revenue of BRL275mn (US$51mn). The fintech also made a debut in the debt market in the same month by issuing a debenture of BRL40mn (US$7mn) to be used to finance microcredit.

Mercado Bitcoin (Blockchain)

Mercado Bitcoin is a cryptocurrency exchange that allows users to buy, sell and trade digital assets. In July 2021, the company raised US$200mn in a Series B round valuing its non-operating parent company, 2TM Group, at US$2.1bn and ranking it among the 10 largest unicorns in Latin America. The company plans to use the investment for hiring, expanding services and investing in infrastructure.

Mercado Bitcoin cited that it onboarded 700,000 new customers in the first five months of 2021, bringing its customer base to 2.8mn. In addition, the firm’s trading volume surged to US$5bn, which is more than 11x the volume in the same period in 2020. The company has not disclosed more recent data.

Related reading:

The ultimate guide to Brazil fintech

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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