Brazilian Payments Firm Elo Plans American IPO

Brazilian payments firm Elo is reportedly working on an initial public offering (IPO).

The company has tapped banking partners as it prepares to list in the U.S. in the second half of the year, Bloomberg News reported Monday (May 11), citing sources familiar with the matter.

Bloomberg notes that the listing plan shows that Brazil’s IPO market could be ramping up following a five-year dry spell that ended earlier in the year.

Elo, which the report says is a Brazilian challenger to Visa and Mastercard, has 34 million cards in its network. The company is owned by lenders Banco Bradesco, Banco do Brasil and Caixa Economica Federal, all of which restructured their holdings last year in anticipation of an IPO, the report added.

The company told Bloomberg it has not made a decision about an IPO, and that it is continuously looking at strategic alternatives and opportunities in capital markets.

Elo had considered going public in 2021, and was looking to raise 1 billion, the report added. For this latest attempt, the company is looking to raise up to $500 million, sources said.

According to Bloomberg, Elo was founded roughly 15 years ago as a joint venture to lower fees banks in Brazil pay to global payment companies. Its growth was driven by bank customers and further helped along by government aid through the Caixa Tem app during the pandemic.

The company has since reduced its dependence on debit cards, the report added, diversifying as Brazil’s Pix instant payment system became more popular.

As PYMNTS wrote earlier this year, the country has “reached roughly 94% digital adoption … with digital payments now functioning as core infrastructure rather than emerging technology.” It’s part of a larger regional trend.

“Latin America’s FinTech ecosystem remains defined by steady financial innovation, backed by renewed funding flows into the region, especially via venture capital,” PYMNTS wrote in a separate report in January.

According to the PYMNTS Intelligence report “Digital Developments: Charting Digital Payment Growth in Latin America,” things like digital wallets, account-to-account transfers and real-time payment systems are supplanting cash, modernizing commerce and expanding access to formal financial services in that part of the world.

The shift is “structural rather than cyclical,” PYMNTS added. The report included experts’ predictions that by the end of the decade, digital payments will make up around two-thirds of eCommerce transaction value and close to half of point-of-sale value across the region, a sign of “sustained changes in consumer behavior rather than short-term substitution.”