Inter makes bold move to acquire Usend and must replicate successful US strategy – Money Times

Interbank
Everything indicates that the bank will maintain abroad the successful strategy it used to grow in Brazil (Image: Divulgação/Banco Inter)

O Inter (BIDI11) made a bold move – and definitely positive – by acquiring Usend, according to analysts. With the startup, the company continues its internationalization strategy, which began with the launch of a marketplace in the U.S. More than that: with Usend, Inter will actually start operating financial products in the US.

THE Great Investments is very optimistic about what Inter can deliver in the United States. According to the brokerage, everything indicates that the bank will maintain the successful strategy it used to grow in Brazil abroad.

“In our view, one of the company’s most relevant assets is the authorization to operate as a Money Transmitter in more than 40 US states, making it possible to offer services such as wallet, debit card, bill payment, among others,” he said. “We assess the acquisition as positive for Inter’s internationalization strategy, giving the bank the option of exploring multiple lines of financial and non-financial businesses internationally, just as it does in Brazil.”

Inter closes a good deal

Inter announced the purchase of 100% of Usend’s share capital last Friday. The startup has more than 150,000 customers who have, in addition to wallet, debit card and bill payment services, access to mobile phone recharge and gift cards.

In the opinion of the BTG Pactual (BPAC11), the company bought not only a good deal, but also time.

The closing of the transaction is subject to the finalization of definitive instruments and the verification of certain precedent conditions, such as obtaining regulatory approvals, including central bank (BC) and US regulatory bodies.

However, given the “simplicity” of the license, the company should not face major problems in getting regulatory approval.

Interbank
The acquisition of Usend was a “cheap” way out of Inter’s internationalization strategy, considering that the company is entering a new market with great demand for financial services (Image: Divulgação/Inter)

Also according to BTG, the acquisition of Usend was a “cheap” option (the amount was not disclosed, but the bank believes that it did not reach R$ 1 billion) for Inter’s internationalization strategy, considering that the company is entering a new market with high demand for financial services, as well as a country where digital banking seems more backward than in Brazil.

“For us, Inter has proven its ability to innovate and move quickly. In Brazil, it is likely that it is already the best and most complete platform for individual customers. So why not replicate this in the United States?” said BTG.

The bank believes that the acquisition of Usend, added to the partnership with stone (STNE), should increase the chances of a successful listing on the American stock exchange.

Share price may go up

The listing of the Nubank in the United States may attract the attention of international investors to Inter, said Itaú BBA.

The Nubank can be valued between US$75-100 billion in the initial public offering of shares (IPO), suggesting a massive premium for Inter of $12 billion in market capitalization.

For the institution, Inter is the one that should be traded at a premium to Nubank for the “per client” metric, and not the other way around.

“Both banks have their merits, but Inter seems to offer a more advanced digital and consumer banking platform”, defended Itaú BBA.

The listing of Nubank in the United States could attract the attention of international investors to Inter, said Itaú BBA (Image: Disclosure/Banco Inter)

“Considering post-credit risk revenues, Inter’s clients are significantly more profitable. Inter’s customers are more engaged in the bank’s super app, which cross-sells insurance, investment and credit products. The bank also registers a much larger deposit per customer, mostly in demand deposits, which are free financing through which Inter can extend credit”, he added.

Itaú BBA reiterated the recommendation of an outperform (expected performance above the market average) for the role of Inter, despite the downward movement over the last month. The estimated fair price for 2022 is R$91.

The institution believes that the high interest rate scenario will help separate the winners from the losers in the Brazilian banking sector’s digital race, and Inter has the necessary tools to be part of the first team.

Genial and BTG have a purchase recommendation for the name, with target prices of, respectively, R$100 and R$90.

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