Brazil’s digital payments darling comes of age, but can PicPay escape the shadow of its controllers? 🤔🇧🇷

FinTech is Eating the World, 27 January

Hey Everyone,

Good morning & happy Tuesday! FinTech IPOs are back, so today all eyes are on Brazilian digital payments darling PicPay that’s going public this week on the Nasdaq stock exchange under the ticker $PICS 🔔 We’re going to unpack their strategy, financials, and challenging governance to see whether this new Latin American stock is worth your time and money in the years to come (plus, inside you’ll also find deep dives into other LatAm gems Nubank NU 0.00%↑ & MercadoLibre MELI 0.00%↑, and why I’m super bullish on both). So let’s jump straight into the awesome stuff 🌶️

Brazil’s digital payments darling comes of age, but can PicPay escape the shadow of its controllers? 🤔🇧🇷

Following the money 💸 In 2017, Joesley and Wesley Batista stood at the center of Brazil’s largest corruption scandal, admitting to paying $123 million in bribes to nearly 1,900 politicians through their meatpacking empire JBS. 8 years later, these same brothers control PicPay, Brazil’s second-largest digital bank, which is going public tomorrow, and is being asked U.S. public market investors to value it at up to $2.5 billion 😳

Today, we’re going to unpack whether PicPay’s operational excellence can overcome its governance overhang. We dissect the company’s 32x credit portfolio expansion, analyse its thin capital buffer, and benchmark its valuation against Nubank, StoneCo STNE 0.00%↑, and PagSeguro PAGS 0.00%↑. We also unpack the Batista family’s permanent control via dual-class shares and what that means for minority shareholders.

This is a brilliant case study in how to price a company where the business is sound, but the ownership carries baggage. Let’s dive in.