Nubank announced this Thursday (15) that it will restructure its Level III BDR program to Level I on the São Paulo stock exchange, B3. With the change, fintech will no longer have a publicly held company in Brazil.
Despite the change, the company’s shares will continue to be available for trading on the Brazilian stock market – and continue to represent a portion (one-sixth) of fintech shares in the US.
In a statement, Nubank said its objective is “to seek greater efficiency and continue to generate long-term value for investors and customers”.
The BDR is an exchange-traded receipt backed by shares listed abroad. At level III, there is a need to register the company with the Securities and Exchange Commission (CVM) and public offering of the assets, which does not occur in level I.
Once implemented, the operation will give the company’s BDR owners the option to receive class A common shares traded on NYSE, at the proportion of 6 BDRs for each share – therefore, to opt for this alternative, the investor must have a minimum of 6 BDRs.
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Nubank logo on the New York Stock Exchange — Photo: Disclosure
Another option will be to exchange Tier III BDRs for Tier I securities on a one-to-one basis. Finally, Nubank investors in B3 will be able to sell their shares.
In a material fact, the company stated that the proposal aims to “maximize the efficiency and minimize consequential redundancies of a publicly-held company in more than one jurisdiction”. In addition, Nubank said the decision does not affect the group’s long-term commitment to Brazil.
The measure comes after the co-founder and chief executive of the digital bank, David Vélez, expressed dissatisfaction with the view of analysts of financial institutions in Brazil regarding Nubank’s shares.
In an interview with Reuters last week, Vélez said that part of the analysts in Brazil seem to expect a more immediate higher profitability from Nubank, but that there are steps to be taken before his thesis is confirmed.
Of the 17 analysis houses that follow Nubank’s action, according to Refinitiv data, three have an ‘underperform’ recommendation, all of them in Brazil (Itaú BBA, Bradesco and Santander). BTG Pactual has a net recommendation.
The announcement also comes in the wake of regulatory and technological innovations, which have made it easier for retail investors from Brazil to trade directly on foreign exchanges.
Nubank’s plan will be submitted to B3 for approval.
With information from Reuters.