Ogier in the Cayman Islands and Graça Couto, Sequerra, Levitinas, Bicudo, Leal & Abby Advogados in São Paulo have helped Chinese conglomerate Tencent invest US$180 million in Brazilian digital credit card provider Nubank.
The local fintech relied on K&L Gates LLP in San Francisco and Los Angeles and Pinheiro Neto Advogados in São Paulo. Cayman Islands firm Campbells is understood to have helped Nubank, but this could not be confirmed prior to publication. The deal closed on 26 September.
Tencent, which operates in a range of sectors including payment services and social media, obtains some 5% interest in Nubank for US$90 million of its US$180 million investment. The other US$90 million is a capital increase in the company.
The deal marks Tencent's first acquisition in Latin America. It also shows Chinese companies' growing appetite for more sophisticated investments in the region. While earlier investments from the world's second-largest economy were in agriculture and construction, recent transaction have involved the automotive, energy and insurance sectors.
Tencent's target company started in 2013 and is expanding its operation from fee-free credit cards and digital payment accounts to the provision of consumer loans by the end of 2018. The start-up already has approval from the Brazilian Central Bank to provide the instrument.
This is not the first time Nubank has attracted foreign investors. In late 2016, Hong Kong-based DST Global put US$80 million into the company. Nubank also obtained a US$53 million credit line from Goldman Sachs and a US$52 million investment from US venture capital group Founders Fund that year.
The start-up has also challenged Brazil's largest banks with legal action. Earlier this year, CADE opened a preliminary inquiry into Brazil's five largest banks after Nubank filed a complaint before the competition regulator. Nubank accuses them of creating barriers to enter the financial technology market.
Tencent's investment comes as the fintech sector takes off in Latin America. Alongside a group of investors, Goldman Sachs poured US$34 into Argentine fintech Ualá last week. In Brazil, local retailer Via Varejo entered into a partnership with US start-up Airfox last month to develop a digital payments system. São Paulo-based venture capital fund Monashees has also been busy, leading a group of investors ready to their put their confidence in local fintech Rebel. That deal occurred in July.
Counsel to Tencent
Partner Giorgio Subiotto and associates Tommy Tuohy, Tim Cone, and Praajakta Pargaonkar in Cayman Islands
Graça Couto, Sequerra, Levitinas, Bicudo, Leal & Abby Advogados
Partner Natalie Sequerra and associates Renato Ferreira dos Santos, Matheus Guedes Camargo and Camila Vallim Almirall in São Paulo
Counsel to Nubank
In-house counsel - Marcos Jarne
K&L Gates LLP
Partner Eric Save in San Francisco and associates Mark Hammes and Nolan Thomas in Los Angeles
Pinheiro Neto Advogados
Partners Bruno Balduccini and Caio Ferreira Silva, and associates Thais Garcez Lima de Mendonça and Caroline Guazzelli Queiroz Gomes in São Paulo