- Nubank (NUBR33) surprised the financial market by announcing its delisting on the Brazilian stock exchange
- The institution offered investors with BDRs in the portfolio 3 options
- Investors who accepted the ‘little piece’, the BDR offered by Nubank during the IPO, are in doubt about what to do with the asset
In the last week, the Nubank(NUBR33) surprised the financial market by announcing the delisting of the Brazilian stock exchange, B3. Fintech will continue to negotiate the BDRs (Brazilian Depositary Receipts), but from now on it will only be publicly traded on the New York Stock Exchange (NYSE), in the United States.
In this report, we tell you how the market saw the exit of B3.
With the change, the institution offered investors with BDRs in the portfolio three options: exchange the assets for shares traded directly in the United States; exchange the tier III BDR for a tier I one; or sell your positions. See the rules for each of the options.
Among those who contributed money to the “roxinho” business, Nubank has a number of individual investors, many of whom had never invested in the stock market before. They accepted the “little piece” offered by the institution in the public offering (IPO) held in December 2021. It was a BDR offered to the bank’s customers at no additional cost – one of Nubank’s many strategies to attract 7, 5 million customers for the IPO.
“It is quite disappointing for the capital market that after encouraging millions of Brazilians to become ‘naked partners’, Nubank sees that the liquidity of the papers was not the desired one and the charges to maintain the BDRs did not compensate for the costs”, says William Castro Alves, chief strategist at Avenue Securities. Understand in this analysis why the company leaves Brazil.
What to do now?
Now, these investors may be wondering what to do with the BDR in hand. For Mario Goulart, investment analyst and creator of the channel “O Analisto”, in practice, this investor will end up divided between two main options: sell the asset or opt for the exchange for BDR level I.
“The ‘little piece’ of Nubank put people on the stock exchange who had never invested before and who probably do not have enough information and knowledge to manage a portfolio on the New York Stock Exchange”, he explains.
Level I BDR is also not the best option for those who have a “little piece” since the IPO, says Goulart. This is because, according to the definitions of the Securities and Exchange Commission (CVM), this investment instrument has less liquidity.
Due to low liquidity, the BDRs that will remain trading on B3 may end up being discounted. For those who prioritize the performance of the role, it may be worth carrying out the conversion to shares on the NYSE (New York Stock Exchange) – an option that will be made available in the “6 for 1” scheme, with six BDRs if converting into an action.
In addition, the Level I BDR can be more complicated for an individual investor to manage. “Maintaining an account and carrying out operations at international brokerages is usually much more expensive than doing so at national institutions. At the end of the day, the investor needs to consider the dollar brokerage, tax taxation, exchange rate correction”, points out Gustavo Pazos, research analyst at Warren.