LatAm fintechs should hold off on planned IPOs - report

MEXICO CITY, Nov 29 (Reuters) - Latin American consumer fintechs should hold off going public until unfavorable market conditions ease, a report by startup platform Latitud said on Tuesday, as rising inflation and interest rates dampen investment prospects.

"2022 is not quite up to speed with last year in terms of consumer fintech, and planned IPOs (initial public offerings) should be delayed," it said.

"With rising inflation and interest rates, consumer fintech was one of the most affected verticals in the fundraising landscape."

The report noted a 29% drop in fundraising by private consumer financial technology startups in Latin America in the first half of 2022, second to a 38% year-on-year fall in China.

The report also pointed to Brazilian digital bank Nubank, which went public last year and has since lost nearly 60% of the $52 billion market value it opened with, according to Refinitiv data.

Uruguay-based payment processing firm dLocal (DLO.O) has seen its stock tank to less than half its value from when it listed in 2021, after hedge fund Muddy Waters warned earlier this month of "red flags" in its accounts - criticisms dLocal rejected. Shares were already down some 30% before the news broke.

"Of course, the market has shifted in 2022," Mike Packer, a partner at U.S. venture capital firm QED Investors, said in the report.

"Through most of 2023, we expect companies will continue to focus more on milestones and runway instead of growth at all costs."

Latin American fintechs had raised a record $12.9 billion in funding last year, the report said, with firms focusing on consumer finance raking in half of that amount.

Now, as funds have pumped the brakes, startups may face more scrutiny and setbacks as they enter late-stage fundraising, investors told Latitud.

Reporting by Kylie Madry; Editing by Sarah Morland and Subhranshu Sahu

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