Itau Pays $1.6 Billion for Stake in Brazil Brokerage Giant XP
Itau Pays $1.6 Billion for Stake in Brazil Brokerage Giant XP
(Bloomberg) -- Itau Unibanco Holding SA paid about 8 billion reais ($1.6 billion) for a stake in XP Inc, as part of a deal it struck with Brazil’s biggest brokerage in 2017.
Itau, Latin America’s largest lender, acquired a stake of 11.4% in XP, it said in a filing late Friday. The operation had been cleared by the Brazilian central bank last year.
The purchase is part of a 2017 agreement that had Itau buying a 46% stake in Sao Paulo-based XP. However, after regulators barred the bank from taking full control of the brokerage in the future, fearing it would endanger competition, Itau started unwinding the deal in 2020. The bank sold about 5% of XP directly and handed the remaining 41% over to its shareholders.
It’s unlikely Itau will end up holding on to its new XP shares for good. The bank’s Chief Executive Officer Milton Maluhy has previously said on earnings conference calls that even though the bank was willing to buy XP shares, it would end up selling the stock or handing the shares over to its own investors, as it did on the past. XP shares are down about 14% year to date.
After their botched union in 2017, the two firms grew antagonistic toward each other, culminating in a heated public spat in 2020 over an Itau marketing campaign that an XP executive called a “desperate act.” Shortly thereafter, Itau said it was studying a divestment.
XP, founded in 2001, has grown into a financial supermarket that offers bonds, stocks, derivatives, and funds from a growing number of asset managers and banks. The firm went public in New York in 2019, with an IPO that at the time was fourth-biggest in the U.S. that year.
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