By Daniel Lanyon on Monday 13 December 2021
The sage of Omaha is famous for a cautionary approach to investing, especially in ‘hot’ areas of the market. With his stake in Nubank, however, Buffett has locked in huge portfolio gains in a short period of time.
Brazilian neobank Nubank has listed on the New York Stock Exchange at a $41.4bn valuation.
The deal makes the three founders of the company David Velez, Edward Wible, Cristina Junqueirao (pictured), all billionaires, and crystalises the largest and most valuable neobank in history.
It also marks the first profits to be locked in from fintech by the world’s most famous investor Warren Buffet.
In July of 2021, just five months ago, Buffett backed Nubank with a $500m investment that counted as an extension of its $30bn Series G.
The investment from Buffett, who co-led the round, came via his main Berkshire Hathway investment vehicle and represents his second foray into fintech.
Buffet had previously invested in Brazillian digital payments company StoneCo but Nubank represents his first on paper gains. Despite the gains of over $150m Buffett has made no declaration of selling his position in Nubank and is well known as a long term investor.
The sage of Omaha is famous for a cautionary approach to investing, especially in ‘hot’ areas of the market like fintech where revenues and profits have often been downplayed in favour of other metrics pertaining to customer growth and engagement.
With his stake in Nubank, however, Buffett has shown his validation in the sector’s underlying hypothesis: the digitisation of financial services.
Nubank was founded in 2013 and now counts c.48 million customers across Latin and Central America.
Since Buffet invested more than 5 million people have used Nubank to open their first account or get their first credit card, the bank says, with nearly 1.1 million small and micro-entrepreneurs having been onboarded.
David Velez, the company’s CEO said in a recent blog post that Latin America has more than 650 million inhabitants and has the potential to be one of the greatest economic centres in the world.
“Unfortunately, it is also a region where some of the biggest industries are oligopolies, with limited innovation and competition.”
“Thus, historically, we Latin Americans came to believe that it was practically impossible to enter and compete in some sectors that were considered beyond the scope of entrepreneurs.”
“When Cristina, Ed and I met, we realized that we shared a common vision: we wanted to dedicate our next decades of work to generating a great positive impact. We truly believed that it was possible to use cutting-edge technology and services to eliminate the complexities of banking in Latin America.”
