Tencent invests in Brazil fintech startup Nubank

Chinese internet giant Tencent (00700.HK) has acquired a minority stake in Nu Pagamentos SA, a Brazilian financial technology firm that offers virtual credit cards, in a deal worth US$180 million.

The transaction marks Tencent’s debut in Latin America’s largest economy, Reuters noted.

Founded in 2013, Nu Pagamentos, or Nubank as it is commonly known, mainly offers fee-free credit cards and digital payment accounts. As of now, the fintech startup is servicing 5 million credit card holders, and 72 percent of its customers are less than 36 years old, according to the firm’s website.

Last year, Nubank began testing a virtual payments and savings account, which allows users to make transfers, pay bills and earn interest on deposits. The new service already has over 1.5 million customers.

Reuters reports that the São Paulo-based fintech startup plans to extend its service offerings to consumer loans by year-end.

In a statement, Tencent President Martin Lau said the investment is aimed at helping Nubank “build a full-service personal finance platform.”

Nubank CEO David Velez told Reuters that Tencent is investing in Nubank through a US$90 million capital increase, and the Chinese giant is also paying US$90 million to acquire partial stakes from current Nubank shareholders.

“We found so much value in partnering with Tencent,” Velez told TechCrunch in an interview. "Particularly everything there is to learn about the Chinese financial market.”

He said Tencent will help Nubank develop further in areas such as payments, consumer loans, engineering, and machine learning.

Nubank has raised US$330 million since its founding, in six financing rounds, according to Reuters. This March, it closed a US$150 million funding round led by investment firms DST Global.

According to online media outlet The Information, the Tencent deal takes Nubank to a valuation of around US$4 billion. Nubank was valued at US$2 billion in March, according to startup tracker CB Insights.

Tencent and Nubank did not reveal the quantum of the stake acquired by the Chinese firm, but The Information suggested that figure could be around 5 percent.

Tencent has long been interested in financial services startups. Last week, the Chinese gaming and social media behemoth and private-equity firm KKR & Co said they were acquiring a minority stake in Voyager Innovations, the fintech arm of Philippines' PLDT.

The deal could be worth up to US$175 million, which will mark Tencent’s first-ever investment in the Philippines.

Voyager provides digital and financial services to Filipinos through its e-wallet PayMaya, mobile-based remittance network Smart Padala, and loans marketplace Lendr.

– Contact us at [email protected]

BN/RC