Business

Brazil's broker Modalmais files for IPO to finance acquisitions and expand credit

According to the company, the IPO will be used to raise funds to invest in technology, marketing, business acquisitions, and expand its credit supply

Photo: REUTERS/Rahel Patrasso
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  • The operation will be coordinated by Credit Suisse, Bank of America, and Itaú BBA;
  • Its main partner, Modal Controle, will sell a share of the business.

Brazilian digital broker and neobank modalmais on Wednesday filed for IPO to seek resources in the market to strengthen itself in relation to rivals such as BTG Pactual digital and XP Investimentos.

Created in 1995 by former Banco Garantia partners as a securities distributor, the group underwent transformations that first made it into the Modal multiple bank and, in 2018, to modalmais, uniting the investment platform and digital bank operations.

READ ALSO: Credit Suisse agrees to buy up to 35% of the Brazilian digital broker modalmais

In the offering, which will be conducted by Credit Suisse, Bank of America, and Itaú BBA, the bank intends to raise funds to invest in technology, marketing, business acquisitions, and expand its credit offer.

The operation will also serve for the main partner, Modal Controle, to sell a share of the business, in which it will be accompanied by a group of individual shareholders.

The offer will be made up of units, receipts representing one common share, and two preferred shares each.

READ ALSO: XP acquires majority stake in the platform of receivables Antecipa

The announcement shows how smaller institutions are now seeing the Brazilian Central Bank’s regulatory agenda favorable to greater competition and the rapid migration of financial services to digital channels as a positive scenario to face a financial system still very concentrated in Brazil.

The group, which said it closed 2020 with a 1.1 million customer base, has recently been expanding partnerships and smaller business acquisitions to strengthen its business.

Last June, it signed an agreement whereby it granted Credit Suisse the option to buy up to 35% of the business, an agreement that evaluated Modalmais at around BRL 5 billion.

This year, Modalmais acquired the Eleven research house and professional training school for the financial market Proseek to be an “accelerator of advisors.”

(Translated by LABS)

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