Initial Public Offering of the Year: PagSeguro

Initial Public Offering of the Year: PagSeguro

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When it comes to initial public offerings, 2018 was a pretty good year. Despite periodic grousing that there weren’t enough companies going public, there were 274 IPOs last year that raised almost $65 billion, according to data compiled by Bloomberg. That was more than the previous year and almost double the amount raised in 2016.

One of last year’s biggest offerings came from Brazil’s PagSeguro Digital, a payment services company, which raised $2.6 billion. It wasn’t only the largest Brazilian IPO since Banco do Brasil Seguridades’ 5.7 billion IPO in 2013 but was the fourth largest tech IPO in history after Facebook, Alibaba and Snapchat.

The company said the proceeds would be used to finance its growth plan, including the early payment of receivables, a feature offered to merchants, as well as selective acquisitions and new technology.

During pricing, bankers described demand as “massive,” reflecting the market’s appetite for tech stocks. It eventually priced at $21.50 a share, up from the suggested $17.50-$20.50. Shares climbed almost 36% during the regular market session to $29.20. Though it initially planned to sell 92 million shares, the company sold 105 million shares. That represented 38.5% of the company. Brazil’s Universo Online controls most of the voting shares.

Prior to the offering, the company had embarked on a 10-day global road show, during which investors expressed interest in PagSeguro’s digital strategy. The company provides online and in-store payment services, including mobile services for small businesses in Brazil. Its competitors include PayPal and MercadoLibre’s subsidiary, Mercado Pago.

At the time, it was estimated that PagSeguro, which was founded in 2016, had processed $12 billion in payments in 2017, while serving almost three million merchants. In the 2017 third quarter before the offerings, PagSeguro reported $217 million in revenue, up 139% from the year earlier period. Revenue was up almost 66% in 2018’s third quarter.