Fri, January 27, 2023

Largest Brazilian Stockbroker, En Route to Record Breach

The Brazilian flag at sunset.

XP Inc. expects to see the biggest initial public offering for a Brazilian Forex company on Nasdaq. The largest stockbroker in the country looks forward to about $1.5 billion to $2.1 billion raise.

With a range of $22 and $25 per share, the broker plans to set its public price at its midpoint. This would value at about $14 billion.

The Sao Paulo-based company claims they want to expand on financial services, both for their current and future verticals. Furthermore, said services include payments and insurance, and digital banking, which can potentially “fund future acquisition opportunities.”

The top Brazilian broker had total revenue of $820 million for the first nine months through September 2019. The net income was $164.9 million, with 1.5 million clients and $84 billion in assets.

Only Banco BTG Pactual and alike can overshadow XP IPO with $14.5 billion in capitalization.

The publicly quoted bank Itaú Unibanco owns a 49.9% stake in XP Investimentos SA with options of full company control. The XP managing partners, on the other hand, own only about 30% but could sell 72.5 million class A shares.

XP on Cryptocurrencies

XP started to offer exchanges on Bitcoin and Ethereum last year. XDEX launched when cryptocurrency popularity surged in the country, with investors five times more exposed to Bitcoin than stocks.

Brazil started a regulatory framework that outlines the tax laws surrounding cryptocurrencies. The Securities Exchange Commission of Brazil helped fund managers looking to add crypto to their portfolios.

Despite Brazilian President Jair Bolsonaro’s dislike towards cryptocurrencies, his administration continues to work on crypto-related projects from before his term.

The country’s central bank head Roberto Campos acknowledges technology as a driving force for rapid transformations in cryptocurrency. Because of this, he plans to “prepare the institution for the future market.”

Brazil is one of the largest cryptocurrency markets in Latin America.

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