Brazilian Payments Network Elo Looking For $7 Billion In IPO

Elo, a Brazil-based payments firm, is planning its initial public offering (IPO) likely for the second half of 2021 and is seeking a valuation of about $7 billion, Reuters reported, citing anonymous sources.

The company has picked six banks to potentially manage its IPO, the first solid sign that it is looking to move forward with the process, which was first proposed by shareholders in August, according to Reuters.

Morgan Stanley, Goldman Sachs and J.P. Morgan will be the main underwriters for the IPO, with the investment banking units of Elo’s owners Banco Bradesco SA, Banco do Brasil SA and Caixa Economica Federal serving alongside those, Reuters reported. Bradesco, Banco de Brasil and Caixa will only be selling part of their holdings for the offering.

Elo will use some of the proceeds to bolster its network of issuers, according to Reuters. While the company’s three founders are some of the country’s biggest lenders, Elo doesn’t have much more than a few other smaller businesses issuing cards right now.

The company also needs to boost its overseas acceptance. Reuters reported that Elo currently has 132 million credit and debit cards outstanding. The focus for that would likely be with Europe and Mexico.

Elo was formed 10 years ago to be competition for companies like Visa and Mastercard. It will be planning its IPO on the Nasdaq. This follows other successful recent listings by companies like XP and StoneCo — both also Brazil-based finance companies, according to Reuters. So far, there’s been no final decision made for the company’s U.S. listing.

Brazilian customers have been shifting toward digital payments and mobile-based commerce at a fairly definitive clip, according to PYMNTS. The numbers of Brazilian shoppers preferring digital shopping shot up by more than 30 percent amid the pandemic. And 20 percent of Brazilian customers reported using mobile phones to make their recent purchases.