June 4, 2018 / 11:33 PM / a year ago

CORRECTED-UPDATE 1-Brazil online lender Agibank eyes $2.7 bln IPO valuation

(Corrects to read civil lawsuit, not probe, in paragraph 9.)

By Carolina Mandl

SAO PAULO, June 4 (Reuters) - Brazil’s Banco Agibank SA said on Monday it was planning a stock market debut valuing the online lender at around 10 billion reais ($2.7 billion), the latest aggressively priced IPO by a local fintech taking on the country’s dominant banks.

Agibank set the price range for its initial public offering between 13.87 reais and 16.96 reais per share, according to a regulatory filing.

The midpoint of the range would value Agibank at around six times its book value, including proceeds of the offering — well above the multiples for Brazil’s four largest banks, which trade between 0.9 and 2 times book value.

Agibank is the second Brazilian digital lender going to market this year, testing if new technologies will give small lenders a fighting chance against Brazil’s dominant big four banks.

In April, Banco Inter launched the first initial public offering by a Brazilian retail bank in nearly a decade. Inter’s shares are down 6.8 percent since its debut and closed on Monday at 17.25 reais.

Agibank and its shareholders would raise around 2.5 billion reais in the offering.

With 530,000 clients, Agibank is targeting low-income consumers through digital channels as well as 450 storefronts. The bank said it plans to use the funds from the IPO for investments in technology, acquisitions and marketing.

Agibank’s loan book totaled 1.2 billion reais in March and its return on equity reached 53 percent, well above the industry average of 18 percent.

In May, according to Agibank, Brazilian federal prosecutors filed a civil lawsuit against Agibank for charging excessively high interest rates. Agibank said in the filing that its interest rates take into consideration clients’ risk and are in line with competitors.

Agibank did not immediately comment on the matter.

The IPO is scheduled to price on June 21 on the São Paulo Stock Exchange. ($1 = 3.74 reais) (Reporting by Carolina Mandl; Editing by David Gregorio and Leslie Adler)

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