Is Nubank’s lower IPO pricing bad news for Brazilian startups?

Brazil’s Nu Holdings, the parent company of the popular Latin American neobank Nubank, announced a reduction to the expected price of its public offering this morning. The well-funded fintech is listing in the United States and its native Brazil, and is among the final companies that TechCrunch is tracking for a 2021 debut.

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In its first F-1 filing, Nubank indicated that it expected to sell its shares at a price of up to $11 apiece, raising a maximum of $3.66 billion in its public-market flotation. The company now anticipates a smaller $9 per-share IPO price maximum and a $2.86 billion max raise.

The downward pricing trend is a disappointment for the company, though it will still command a strong valuation when it raises billions in its IPO. Nubank is expected to price its IPO on December 8.

What’s going on with an IPO that was expected to be a key moment for Brazilian tech companies in particular, and fintech upstarts more broadly? We unpacked the company’s new public offering valuations and dug into whether Nubank’s downward revision will matter for Brazilian startups generally. Let’s talk about it.

Calculating Nubank’s new IPO worth

The Nubank IPO is a little bit complex, given that the company is selling Class A shares on the United States’ New York Stock Exchange and BDRs, or Brazilian Depositary Receipts, on its home market’s B3 stock exchange. That — and an indication of interest from a host of the company’s backers for more shares — makes for an interesting aggregate package.

But that cannot slow us down, so let’s get some valuations in hand to better understand the company’s new anticipated valuation.

In its latest filing, Nubank states that after its IPO it will have 4,608,684,459 ordinary shares outstanding, a figure that rises to 4,637,255,888 when we include equity reserved for underwriter purchase. Using that larger figure, at its IPO price range of $8 to $9, the company would be worth between $37.1 billion and $41.7 billion.

However, those valuations are only part of the picture. At its first IPO price range of $10 to $11, Renaissance Capital calculated that on a fully diluted basis — inclusive of stock options that have vested, but have yet to be exercised, etc. — the company was worth $50.8 billion at $10.50 per share.

Converting that valuation to $9 per share, the top end of its new range, gives Nubank a $43.5 billion fully diluted valuation.

Is that number good?