Fees on the Nubank IPO were among the lowest of the year. The parent company of the Brazilian fintech raised over two billion dollars in the operation, but only 1.6% of it went to its underwriters.
Only three of 490 IPOs in the US have paid a smaller percentage.
The Brazilian press reported that Nubank had a bargain. Their term, but it did land a better deal than three other Brazilian fintechs that went public before it did: PagSeguro, which IPO'd on the New York Stock Exchange in 2018?
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These paid 2.4%, 3.6%, and 4.3% in fees. Nubank will pay $41.6 million in commissions and discounts, compared to $82 million for XP.
It got us thinking that it could be a sign of some of the changes we are planning to track in 2022, and that Nu's exit was one of the hottest operations of the year. Let's see what we can find.
Either hot or not.
IPO fees can be affected by market dynamics. The total fee percentage is not the only factor that matters; other elements can also show a company's market strength.
The company had no shares set aside for its bankers to buy at its IPO price, according to The Exchange. If the company chooses, the banks can purchase a block of shares at the IPO price. If the company the banks are helping take public performs well, they will be able to make free profit.
If 5 million shares in an IPO are secured by the banks, they can lock in $50 million. It is more complicated than that, but illustrative math can help.
