XP, the Brazilian brokerage whose listing on Wednesday will be one of the year’s biggest, has priced its shares above the range initially set by investment banks, running counter to a recent chill in new listings.
The company announced on Tuesday evening that it had priced its shares at $27, eclipsing the $22-$25 range set on Monday, indicating strong investor demand. The near-$2bn public share offering on the Nasdaq stock exchange will mark the fourth-largest US initial public offering of the year and give XP a market capitalisation of about $15bn.
The company will offer 42m new shares, raising $1.14bn, while existing private shareholders will sell a further 30m existing shares representing about $810m.
XP — pronounced “sheessPEH” — launched in 2001 and offers brokerage, fund management and investment banking. Its aim has been to break open Brazil’s concentrated finance sector. The company serves 1.5m customers and has generated $890m in revenue so far this year, according to a filing with the US securities regulator.
The higher-than-anticipated share price comes after a number of high-profile flops this year softened the market for new listings.
Shares in just one of the five largest US listings remain above their IPO price. Stock in Uber, the largest deal of the year with $8.1bn raised, and Lyft, which raised $2.6bn in the third-largest IPO, have both lost nearly 40 per cent of their value.
The private valuation of WeWork, which scrapped plans to list in September after investors voiced concerns over its governance and leadership, has dropped from a high water mark of $47bn to just $8bn.
Investment banks responded to the weaker environment by pricing more deals at the lower end of their ranges this quarter than earlier in the year.
Outside the US, Saudi Aramco raised $25.6bn on the local Tadawul stock exchange, eclipsing Alibaba’s 2014 IPO to claim the largest listing on record.