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(Bloomberg) — Elo Servicos SA, the payments firm owned by Brazilian state and private lenders, has chosen banks to handle its long-awaited initial public offering, according to people familiar with the matter.
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The company has engaged Bank of America Corp., Bradesco and UBS BB to manage the deal, said the people who weren’t authorized to speak publicly about the situation. Elo is seeking a potential US debut in the second half of this year, the people said.
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The plan signals that Brazil’s IPO market could be gaining some momentum after ending a five-year drought earlier this year. Public offerings had been on hiatus amid high interest rates that caused outflows from Brazilian stocks.
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Elo, a local challenger to Visa Inc. and Mastercard Inc. with 34 million active cards in its network, is equally owned by Banco Bradesco SA, Banco do Brasil SA and Caixa Economica Federal. The lenders restructured their holdings last year in preparation for an IPO.
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There’s no decision about an IPO, and Elo continuously evaluates strategic alternatives and opportunities in capital markets, the company said.
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BofA, UBS and Banco do Brasil declined to comment. Bradesco and Caixa Economica didn’t immediately respond to a request for comment.
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The company also considered an IPO in 2021, eyeing a valuation of roughly $4 billion and looking to raise about $1 billion. Now Elo is seeking to raise as much as $500 million, the people familiar said.
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Brazilian firms are testing the IPO market again, albeit with mixed results. PicS NV went public in January to become the first significant debut for a Brazilian company in the US since 2021. Fintech AGI Inc. followed in February after downsizing its offering. Both stocks are down more than 35% from their debut.
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Last week, Compass Gas e Energia SA, an energy infrastructure firm, priced the first IPO on the Brazilian exchange since 2021. Shares, which came in at the bottom of the indicative range, fell on Monday, their first day of trading.
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Elo was founded more than a decade ago as a joint venture to reduce the fees Brazilian banks pay to global payment firms. Its growth was fueled by bank customers and was further accelerated by the distribution of government social aid through the Caixa Tem app during the pandemic.
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The company was more dependent on debit cards than its US rivals but then diversified into services as debit was eroded by Pix, the instant payment system run by Brazil’s central bank.
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—With assistance from Matheus Piovesana.
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English (US)