January 24, 2018 / 8:44 PM / 2 years ago

Brazil's PagSeguro rallies 34 percent in New York debut

SAO PAULO, Jan 24 (Reuters) - Shares of Brazilian card processing firm PagSeguro Digital Ltd soared 34 percent in their debut on the New York Stock Exchange on Wednesday, pushing its market capitalization to $8.8 billion, nearly 40 percent of main rival Cielo SA.

PagSeguro’s initial public offering on Tuesday was more than 10 times oversubscribed, according to a person with knowledge of the matter. The transaction is expected to reach $2.7 billion with the sale of additional allotments of shares, making it Brazil’s biggest IPO since April 2013.

PagSeguro’s shares rallied to $28.87 in early afternoon trading in New York, up from the IPO price of $21.50 price on Tuesday. Investors are optimistic about the growth prospects for Brazil’s credit card industry as Latin America’s largest economy pulls out of a deep recession.

The buoyant valuation is a good sign for other credit card processing firms that are expected to list their shares in the following months, including Stone Pagamentos SA. Reuters reported on Monday that the company also plans an IPO in New York.

Founded in 2006, PagSeguro is owned by Universo Online SA (UOL), a firm controlled by Luis Frias, scion of the family controlling newspaper Folha de S. Paulo. UOL will receive $1.2 billion from the sale of part of its stake, already including the sale of additional share allotment.

PagSeguro itself raised $1.1 billion to fund acquisitions and finance working capital with the sale of additional shares.

The transaction is expected to reach $2.7 billion with the sale of the supplementary allotment of shares over the next 30 days, according to a source with knowledge of the matter.

$1 = 3.17 reais Additional reporting by Tatiana Bautzer; Editing by Cynthia Osterman

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