Fintechs expected to lead IPOs on Brazil stock exchange

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Tuesday, April 18, 2017

Brazilian fintechs are expected to take the lead in IPOs on the country's stock exchange, as they plan to list B3 shares in the wake of their rapid growth in popularity due to the solutions they offer to an expensive and bureaucratic banking system.

After seeing billions of dollars raised by financial start-ups in markets such as the US and Asia, entrepreneurs at Brazilian fintechs consider the environment to be favorable for similar moves to be made in Brazil, albeit on a much smaller scale.

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Executives at fintechs are already aware of bigger financial companies, like XP Investimentos and Banco Intermedium, which have already voiced their desire to launch shares, according to Reuters.

Those who speak most openly on the subject are executives of companies whose businesses need more resources to keep pace with expansion, such as those that offer credit.

"Our business depends on capital, so it's natural for companies in this market to look for capital markets at some point," said Sandro Reiss, partner of Geru, established in 2013 and one of the largest online credit companies in the country. "An IPO is certainly on the menu."

Biva, a platform created in 2015 that connects borrowers to lenders, has also shown interest in the stock market and is reportedly hoping to carry out an IPO in the next few years.

Creditas, which offers personal credit online and was founded in 2012, is another fintech considering an IPO. The company also recently received contributions from the International Finance Corporation, which is the private sector lending arm of the World Bank, as well as South African media group Naspers.

"We are a company that needs capital and wants to grow and remain independent, so it is logical that an IPO is within our potential plans," founder and president Sergio Furio was quoted as saying by the agency.

Creditas says it has an active credit portfolio of 135mn reais.

Personal credit company Simplic said it reached 1mn clients in February, some two years after its creation. Banco Intermedium expects to reach the same target next year.

In just two years, the number of fintechs operating in Brazil has risen from just a few dozen to around 250, according to February data from Fintechlab.