Alibaba's Ant Financial Joins Warren Buffett in Hot Brazil Fintech IPO

(Bloomberg) -- Ant Financial, Alibaba’s finance affiliate controlled by billionaire Jack Ma, agreed to buy a stake in the Brazilian payments firm StoneCo Ltd after the company prices its initial public offering, joining Warren Buffett in investing in Brazil’s booming financial-technology startup landscape.

Key Insights

  • StoneCo, which has a model similar to Jack Dorsey’s Square, is expected to price its initial public offering next Thursday.
    • It’s offering up to 54.9 million shares, including selling holders and all potential underwriters’ options, and could raise as much as $1.26 billion if it prices at the top of its range.
  • Ant Financial will buy $100 million in StoneCo’s shares at the IPO price in up to 30 days after the offering, according to a regulatory filing.
  • Buffett’s Berkshire Hathaway Inc. is also seeking a stake in the firm, and has indicated interest in buying up to 14.2 million Class A shares.
  • Aside from Buffett and Jack Ma, another billionaire family in also seeking to increase the stake it has in StoneCo. Madrone Capital Partners, backed by heirs to the Walmart Inc. fortune, has also indicated it wants to buy more shares in the offering, and could add 2.4 million shares.
    • Madrone held a 9.3% stake, or 6.21 million Class A shares, prior to the offering.

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  • StoneCo is following the footsteps of another Brazilian payment firm with a successful initial offering this year: PagSeguro Digital, which raised about $2.6 billion on the New York Stock Exchange in January, the biggest IPO at the time since Snap Inc. in 2016.
  • Earlier this month, another Chinese giant took interest in Brazil’s fintech landscape, as Tencent Holdings Limited acquired a minority stake at Brazilian credit-card startup Nubank.
  • Goldman Sachs estimated there were 210 different fintech firms in Brazil last year, the most in Latin America, up from 54 at the beginning of 2015, and estimated the firms are fighting for a revenue pool of about $75 billion across banking and insurance markets in 10 years.
  • Among other shareholders of StoneCo are 3G Capital Inc -- of billionaire Jorge Paulo Lemann -- and former Brazil central bank chief Arminio Fraga, who’s selling part of his stake in the offering.
  • The year is heating up for Brazilian companies seeking to sell shares for the first time, as the nation’s presidential elections are headed to a close next Sunday. Earlier today, two companies, technology provider Tivit and mid-sized bank BMG, filed their intent to do an IPO at the local exchange.

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