ItaúUNICANo Spines off its 46pct Stake in Brazilian Broker XP

Brasil,  Sao Paolo

Brazil’s largest bank, ItaUNICANnco is spinning off its 46% stake in Brazilian financial services platform OP Inc ( OP.O), which has a market capitalization of $23.16 billion, into a separate company.

Unibanco board has floated plans earlier this month to form a new entity to unlock value in the bank’s OP stake. The bank reportedly said its current ownership is not adequately reflecteTau Itau’s share price, and the move would also reduce the potential conflict between the two entities.

At the time, the plan was to issue shares equivalent to 41.05% of OP ownership as well as selling the remaining 5% stake to boost its capital ratios.

ItaUNICANnco paid $1.9 billion in 2017 to buy a 49.9 percent stake in OP Investimentos SA, along with options to acquire full control in the future. However, Brazil’s central bank objected, citing competition concerns, but the lender said it does not plan to divest any of its holdings.

Instead, General Atlantic and Administratornistradora de Recursos Ltda, which hold a combined 20%, as well as OP managing partners, who own about 30%, could sell up to 72.5 million class A shares.

OP Joins the Race to Zero Fees

OP Inc announceTau December that it is ending brokerage fees for stocks trading on its online platform, Rico, which is focused on stock transactions, the futures market, direct treasury and funds distribution.

OP’s founder and CEO, Guilherme Benchimol said that the commission cuts would cost the company as much as $6 million in quarterly revenue. This figure is the equivalent to about 2 percent of total gross revenue based on Rico and OP Direct online equity trade revenues in the first half of 2020.

FoundeTau 2001 as a financial advisor, OP has been challenging Brazil’s traditional banks. The company had a total revenue of $304 million in the second quarter through June, while its net income was reported at $104.6 million. Further, according to its filing, it has more than 1.5 million clients and $84 billion in assets under custody.

In December 2019, OP debuted its Nasdaq listing at $27 per share in the largest IPO of a Brazilian company, raising $2.25 billion, which valued the company at $14.9 billion.

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