By Anirban Sen and Carolina Mandl
BANGALORE/SAO PAULO (Reuters) -Brazil's Nubank is seeking a valuation in its planned U.S. initial public offering that would push the eight-year-old fintech past the $55.4 billion value of the country's top traditional lender, two sources familiar with the matter said.
In a recent funding round led by Warren Buffett's Berkshire Hathaway (NYSE:BRKa) Inc, Nubank was valued at $30 billion. With 40 million clients in Latin America, Nubank is the latest of several fast-growing financial services companies - often serving customers overlooked by banks - grabbing investors' attention.
If Nubank is listed at a market cap greater than Itau Unibanco Holding SA's $55.4 billion, it would vault into the ranks of the world's largest fintechs, ahead of recently listed Robinhood Markets Inc (NASDAQ:HOOD), for example.
One source said that in recent weeks Nubank's bankers have pitched a valuation of as much as $100 billion. But the source said the Brazilian fintech unicorn was unlikely to be valued so highly at the time it goes public.
Nubank declined to comment on the expected valuation.
Nu Pagamentos, as Nubank was formally known, ended 2020 with a loss of 230 million reais and a loan book of roughly 18 billion reais. In the first quarter it managed to turn a profit, with net income of 6.8 million reais ($1.30 million), according to Brazil's central bank.
Last year, mammoth Itau posted 18.5 billion reais in profit, or a return on equity of 14.5%, despite the pandemic. Its loan book totaled 870 billion reais.
In a sign of growth potential, Nubank has already issued more debit cards than Itau, luring many clients who had avoided traditional bank accounts. Nubank has also embarked on a wider regional expansion encompassing Mexico and Colombia.
According to a ranking by CBInsights, Nubank is the seventh most valuable unicorn worldwide, behind fintechs Stripe, Klarna and Revolut.
Nubank has hired investment banking units of Morgan Stanley (NYSE:MS), Goldman Sachs (NYSE:GS) and Citigroup (NYSE:C) to help lead its United States.
($1 = 5.2117 reais)