The Buffett-backed neobank, Nubank from Brazil, is reported to be eyeing an IPO that would value the company at over $55 billion which will be more than what the largest traditional lender in Brazil is valued at right now.
This just goes to show the kind of heated market that fintech seems to be in and how investors have been falling over one another to make sure that they get a share of the pie. It also shows the kind of opportunity that is available in fintech and how users are ready to embrace new technology and new entrants into the market as long as the features and the platforms/services that they offer are user-friendly and in tune with the times. Over the last couple of years, we have been seeing that the traditional lenders and other financial firms have been slowly overtaken by newer entrants who have embraced digitalization much faster than the traditional companies.
Though Nubank themselves have not commented anything on their IPO, some reports say that they could be valued at over $100 billion but those kinds of astronomical figures would not make much sense. Even then, for a Brazilian fintech with a majority of their userbase in the Americas and with a lot of potentials to expand into other developing regions of the world, which is likely their next growth target, to be valued over and above the likes of Robinhood shows us how the current demand for digital banks is and how investors view it as something likely to be the rule of the world in the coming years.
The traditional banks are likely to be replaced by digital banks in the future and that is why we are seeing them have high valuations despite many of them not yet having a profitable year so far. This is likely to change as digital banks become the norm and the current generation of young users become those with deep pockets and who view digital spending as a normal part of their everyday lives. It is reported that the company has hired Morgan Stanley, Goldman Sachs, and Citigroup to lead its efforts for an IPO in the US. It would be interesting to see how much demand this IPO is likely to generate and what valuation it would be able to fetch for the company.