NuBank IPO: What You Need to Know

By Duncan Ferris


Latin American fintech business NuBank has announced its intention to press ahead with an IPO.

The company’s parent company, Nu Holdings, will IPO on an as yet unspecified date. It will join the index under the ticker NU.

What we do know is that the company is seeking a valuation of up to $50bn. This is based on its initial pricing range of $10 to $11 per share. Bookrunners for the IPO include Morgan Stanley, Goldman Sachs, Citigroup, HSBC and UBS Investment Bank.

What is NuBank?

NuBank was founded in 2013 by David Vélez, Cristina Junqueira and Edward Wible. Vélez currently serves as CEO. The trio decided to start the company as they thought there was an opportunity to disrupt the financial services industry in Latin America. It is now one of the region’s first and most dominant digital banks.

Innovation is a big part of the business. Indeed, the philosophy of the company is based on the assertion that the Latin American banking sector is essentially suffering from a lack of competition.

NuBank’s IPO filing shows that the business is firm in the belief that this lack of competition has resulted in less innovation, more limited products and services, and higher fees than in Europe and North America.

The company has attracted high profile investors. These include Sequoia Capital, Tiger Global Management, Goldman Sachs and Warren Buffet’s Berkshire Hathaway.

How does NuBank make money?

NuBank started life as a credit card provider. However, it has since expanded its offering to include personal and business savings accounts, personal loans, life insurance and investment products.

The company stands out from its competitors by not charging annual fees for many of these services. Instead, it generates revenue through means such as interchange fees and interest related to credit cards. These sources accounted for 30% and 23% of its revenue in the first nine months of 2021.

The company’s customer base has increased from 6 million in 2018 to 41.8 million at the end of September 2021. All of these customers come from Brazil, Mexico and Colombia, the three territories in which the company currently operates. Impressively, the company’s customer base includes approximately 28% of the population of Brazil aged 15 and above.

NuBank achieved revenue of $1.06bn in the nine-month period ended 30 September 2021. This was almost double the $534m which the company registered in the comparable period last year.

Even so, the company is currently running in the red. NuBank returned a loss of $99.1m for the first nine months of 2021. This is higher than the loss reported for the same period in 2020, which sat at $64.4m.

In the three months leading to 30 September 2021, NuBank’s average revenue per active customer sat at $4.90. The company says this its average revenue per customer is likely around 10 times lower than for the average bank in the region, due to NuBank’s lack of fees.

However, the company said it was optimistic that it can increase this number by exposing customers to its other products and services.

NuBank’s growth prospects

The company’s plans for near-term growth appear to be three-pronged. First, it intends to continue to stimulate customer acquisition through the creation of mobile app content and strengthening its brand through steps such as building its social media presence.

Next, NuBank intends to increase its share of customers’ financial lives. It notes that it can use the ever-growing amount of data it has from customers to make recommendations about new products or services they might find useful.

Finally, the business has signalled an intention to partner with other providers to serve customers in areas where they don’t currently have a core product or service.

The company says its current markets of Brazil, Mexico and Colombia are “significantly underpenetrated” with respect to financial services. NuBank added that this could be clearly seen as a large number of adults remained unbanked. The nations also generally feature relatively low levels of household debt and relatively low adoption of credit cards.

Even so, it does not look like the company will confine itself to its current geography. It has noted that the retail financial services and marketplace revenue opportunity in Latin America amounted to $186bn in 2020. This is projected to grow to $269bn by 2025.

The company has ambitiously stated that it could also look to opportunities in adjacent sectors. It has expressed an interest in expanding into e-commerce, healthcare and telecommunications, where it sees similar opportunities to simplify customers’ daily lives.

Should you invest in NuBank?

Let’s not pretend that NuBank does not face challenges. As a digital bank, the company is heavily reliant on its technology and third-party data centres. Much of the company’s future success could depend on its ability to persuade customers to access products and services which have not historically had much uptake in Latin America.

Additionally, regulation and other politically influenced changes in Brazil, Mexico and Colombia could have a huge impact on how the company operates.

Even so, this is an exciting opportunity. The business has taken proven concepts and applied them to geographies which have been neglected by their own financial services sector. Its ambitious and innovative team look like they could really do something special, with expanding into adjacent sectors looking like a real possibility.


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Author: Duncan Ferris

This article does not provide any financial advice and is not a recommendation to deal in any securities or product. Investments may fall in value and an investor may lose some or all of their investment. Past performance is not an indicator of future performance.

Duncan Ferris does not hold any position in the stock(s) and/or financial instrument(s) mentioned in the above article.

Duncan Ferris has not been paid to produce this piece by the company or companies mentioned above.

Digitonic Ltd, the owner of, does not hold a position or positions in the stock(s) and/or financial instrument(s) mentioned in the above article.

Digitonic Ltd, the owner of, has not been paid for the production of this piece by the company or companies mentioned above.

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