Nu Holdings Stock in Focus as $13 Billion Monzo Acquisition Talks Emerge

Nu Holdings (NYSE:NU), the Brazilian fintech, will be in the spotlight when markets open on Monday after reports that it is considering its biggest buyout ever. These rumors come as its stock remains under pressure. It ended last week at $13.60, down by 28% from its all-time high.

Nu Holdings is Considering a Monzo Buyout

Nu Holdings has become the biggest neobank in the world with millions of customers and annual revenue of over $15.7 billion. It has done that by taking a sizable market share in Brazil and other South American countries like Mexico and Colombia. 

Now, the company is aiming to gain market share in other countries. According to the FT, it is considering buying Monzo, a top neobank that has raised billions of dollars from venture capital companies. A potential deal would value Monzo at up to $13 billion. Nu would pay for the transaction using a combination of cash and shares. 

The two companies have not confirmed the potential transaction. Also, FT believes that Nu may decide to take a stake in the company instead of a full buyout. Morgan Stanley and Qatalyst are advising Monzo on the best approach.

The deal comes at an important time for Monzo. It is contending with more competition from Revolut. At the same time, Diana Layfield, the CEO, has launched a major turnaround operation that has involved exiting its US operations and launching new markets like Ireland and Spain. 

Nu Holdings’ Business is Growing

Nu, which was backed by Warren Buffett’s Berkshire Hathaway, is still seeing strong growth in its core Latin American markets. At the same time, it is aiming to expand its business in other markets, including in the United States, where it received a banking license.

The most recent results showed that its revenue jumped by 39% in the second quarter, with the number of users hitting 139 million. Its net income soared to over $1.06 billion, while its cash and short-term investments jumped to over $22.2 billion. 

Benzinga data shows that analysts expect Nu Holdings’ revenue has more room to grow. The average estimate is that its annual revenue will jump to $22.8 billion this year, followed by $28 billion next year. 

According to Monzo, its revenue jumped to 1.7 billion pounds ($2.25 billion), with its adjusted profit before tax hitting 172 million pounds. 

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