Buffett-Backed Nubank Cuts Down IPO Price

Brazilian digital bank Nubank has reduced the target price of its American stock market debut by about 18% amid a worldwide tech stock selloff that’s impacting initial public offerings (IPOs) as the year winds down, Reuters reported Tuesday (Nov. 30).

Nubank, backed by Warren Buffett’s Berkshire Hathaway, had planned for an IPO valuation of more than $50 billion, based on a record explosion in U.S. capital markets, according to the report.

However, a rise in Treasury yields has soured investors on major tech stocks, the report stated. Additionally, the omicron variant of COVID-19 has people uneasy about new pandemic-related damage.

Nubank submitted an amended Securities and Exchange Commission (SEC) filing that says it now plans to sell 289.2 million shares at $8 to $9 each, according to the report. The company aims to raise up to $2.6 billion at a $41.5 billion valuation. The Sao Paulo company had initially planned to raise $3 billion, selling shares at $10 to $11 a piece.

Founded in 2013, Nubank began as a credit card issuer that charged no annual fees. It has since gained more than 48 million customers and unveiled products that include loans and checking accounts, the report stated.

The company primarily makes its money from fees paid by merchants when customers make transactions, according to the report.

Last month, Nubank reported it had managed to turn a profit in the first half of the year at its operations in Brazil.

Read more: Nubank IPO Filing, Valuation Spotlights Heady Neobank Growth Expectations

Nubank’s planned IPO comes soon after several major public offerings this year, such as Rivian Automotive, Didi Global and Coupang, as well as big players in the FinTech sector such as Robinhood and Coinbase, the report stated.

While American IPOs have taken in a record $275 billion this year, investors have been wary of putting their money into some Latin American FinTechs after the Brazilian payments company StoneCo reported massive losses in its most recent results, with shares declining more than 80% this year, according to the report.