Spain’s BBVA bank upped its stake in digital bank Neon with a $300 million (€263 million) investment, giving the legacy financial institution an additional 21.7% interest in the Brazilian startup, according to a press release on Monday (Feb. 14).
BBVA anticipates the new deal will close before the end of February. BBVA has held a stake in Neon since 2018 through its venture capital fund Propel. Following the closing of this new investment deal, BBVA will hold a 29.7% stake in Neon.
Headquartered in São Paulo, Brazil, Neon was founded in 2016 and caters to 15 million registered accounts comprised of individuals, people who are self-employed and small businesses in Brazil. The digital bank offers free checking accounts, debit and credit cards, payroll loans and specialized products for small businesses.
See also: Spanish Banking Group Sabadell Considers Selling Payments Business
Acquiring a larger stake in Neon aligns with BBVA’s plan to expand into new markets by investing in digital platforms. Brazil is especially attractive, the company said, due to its large economy and population of over 210 million people.
“The commitment to innovation is part of BBVA’s DNA, and digital is opening new ways for us to grow in very attractive markets,” BBVA Chairman Carlos Torres Vila said in the announcement. “Neon’s value proposition connects with the financial needs of Brazilians serving as a platform to continue to grow rapidly in a market with great potential.”
As part of its digital strategy, BBVA recently invested in Atom Bank in the U.K. and Solarisbank in Germany. BBVA also expanded into Italy’s retail banking space with its award-winning app.
Read more: Bank BBVA Teams With Ant’s Blockchain Platform Trusple
Before BBVA’s investment, Neon raised $423 million via several funding rounds that have included General Altlantic, Vulcan, BlackRock, Paypal and Banco Votorantim. Neon’s management team includes founder and CEO Pedro Conrade and executive managing partner Jean Sigrist, who will continue to lead the company, per the release.
“BBVA’s investment and global expertise will allow Neon to offer loans in a more simple, sustainable and inclusive way,” Neon founder Pedro Conrade said. “We want to reach more Brazilians, contributing to reducing inequalities and making a difference in their lives. Neon will continue to grow rapidly while delivering on its purpose.”